Agent Has No Duty to Tell Insured of Pending Nonrenewal: Connecticut High Court

A Connecticut insurance agent has no duty to inform clients that their home insurer intends not to renew their insurance policy, the state’s high court affirmed in a case where the homeowners argued their long relationship with the agent created a legal duty for their agent to inform them.

The homeowners, Lee and Keleen Deer, who were seeking payment on a claim after a fire destroyed their home, lost their appeal of lower court judgments in favor of their agent, Kevin Trahan, and his insurance firm, The Trahan Agency.

From 2001 through 2017, Trahan was the Deers’ insurance broker, procuring a homeowners insurance policy from Allstate that Allstate renewed 15 times. From March 2017 through June 2019, the Deers used a different broker. In 2019, they restarted their relationship with Trahan, obtaining a Century-National Insurance Co.

Shortly after issuing the policy, Century-National inspected the Deers’ home and found a defect in the exterior siding. The insurer sent an email to Trahan informing the agency that the Deers were required to repair the defect and provide notice of the repair no later than three months before the policy was to renew.

After not receiving notice of repair by the deadline, Century-National sent another email informing Trahan that the policy would not be renewed if notice of repair was not received by the expiration date. Four weeks later, and two months before the expiration date, Century-National sent a nonrenewal notice to the Deers by certified mail, which the insureds claimed they never received.

Shortly after the policy expired, the Deers’ home was destroyed by a fire. Century-National denied the claim because the home was not insured at the time. The Deers said they had assumed their policy had been renewed just as their Allstate policies had been for 15 years.

The Deers sought damages from Trahan, arguing their relationship for more than two decades created a legal duty requiring Trahan to notify them of communications from Century-National but the agent had negligently failed to do so.

Trahan and his agency insisted they had no duty under Connecticut law to notify the Deers of the insurer’s impending nonrenewal. After the trial court sided with Trahan, the homeowners lost their appeal to the appellate court. The Deers then took their case to the state Supreme Court, which also sided with Trahan.

The high court acknowledged the general rule that a broker owes no legal duty to the insured after the broker has successfully procured the policy, and that a broker is entitled to rely on the insurer to notify the insured of nonrenewal because such notification is the insurer’s statutory and contractual obligation.

While ordinarily a broker is justified in relying on the insurer, there is an exception if a broker gives some affirmative assurance that it will assist in the renewal of a policy. But the court found no evidence that Trahan or the agency had represented that they would assist in renewing the coverage after the issuance of the policy.

Topics Agencies Connecticut