Maryland Assembly OKs Measure to Shield Agents from Notice Liability

April 4, 2007

Maryland insurance agents are applauding the General Assembly for relieving them of liability in the delivery of notices about flood and homeowners insurance.

The Senate and House of Delegates unanimously passed companion bills (Senate Bill 790/House Bill 1106) that remove legal liability from insurance agents to produce and deliver flood and homeowners insurance coverage notices. As a result, insurance companies, not insurance agents, will be required to deliver customer notices regarding flood and homeowners optional coverages.

The legislation now goes to the Gov. Martin O’Malley for approval.

Insurance agents will only deliver notices to the extent that they are directed to do so by the insurance companies they represent, according to the Insurance Agents & Brokers of Maryland (IA&B).

IA&B Chairman Tony Bennett said the legislation corrects a liability situation for agents that never should have surfaced.

“We do not believe that the original intent of the law was to place a legal burden on agents, and with the passage of these amendments, we are one giant step closer to protecting agents from this unintended consequence of the law,” Bennett explained.

According to Bennett, the legal liability was inadvertently forced upon agents by provisions placed in the state’s flood and homeowners notice law. After the law’s enactment, IA&B said it worked with Del. Brian Feldman, D-Montgomery, and Sen. John Astle, D-Anne Arundel, to introduce bills that protect agents and ensure customers receive accurate notices.

IA&B anticipates that Gov. O’Malley will sign the bills. Once that happens, only insurance companies will be legally liable to deliver flood and homeowners coverage notices, not insurance agents.

IA&B of Maryland is the PIA National affiliated trade association that represents independent insurance agents.

Source: IA&B

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