Commentary: Insureds’ Agreement to Read Insurance Policy

By | January 23, 2014

A shock wave was recently sent through the insurance agent/broker community in Connecticut.

In a surprising case at the United States District Court for the District of Connecticut, O&G Industries, Inc. v. Aon Risk Services Northeast, Inc., 922 F.Supp.2d 257 (D. Conn. 2013), the Court, interpreting Connecticut law, held that the insureds agreement with the insurance broker whereby the insureds agreed to read the insurance policy and notify the broker of any inadequacies with the insurance procurement did not bar a claim for malpractice against the insurance broker even though the insureds failed to notify the broker of the inadequate coverage that had actually been purchased.

The Court found that the conduct of the insureds in violating the express agreement with the broker to read the policy and notify the broker of problems would give rise to a possible defense of contributory negligence but it would not be a complete bar to the malpractice lawsuit.

The broker in the O&G Industries case argued that because the insureds failed to review the policies that were procured by the broker to make sure that they fit their insurance needs, the broker did not have a duty to ensure that the procured coverage was sufficient to comply with the insureds’ procurement needs, and that the inadequacy could not have been a proximate cause of the lack of coverage.

The broker argued that the insureds’ failure to alert the broker of any problem with the coverage was a proximate and superseding cause of the injuries.

The Court found that any argument that the insureds failed to meet their own obligation to review the policies to ensure that their insurance needs were met did not obviate the broker’s role in causing the injury.

Notwithstanding the Court’s holding in the O&G Industries case, it is still a preferred practice that insurance agents and brokers request the insured to sign a document in which the insured agrees to read the insurance policy and to notify the agent of any missed or inadequate coverage of the policy.

The document signed by the insured should acknowledge in its text that the insured understands their role in making sure the policy that was delivered complied with their requests for coverage and how important their immediate notification of missing or inadequate coverages was necessary to meet their overall insuring needs through correction of the policy.

Although this may not be an absolute bar in a malpractice lawsuit against the agent or broker, it provides strong evidence of contributory negligence.

Ultimately a jury will have to decide the extent or percentage of negligence of the insured’s failure to read and response played out in the ultimate insurance purchase.

About Steven Plitt

Steven Plitt is the current successor author to Couch on Insurance, 3d. He maintains a national coverage practice with The Cavanagh Law Firm. He has been listed continuously as one of Arizona's 50 lawyers by Southwest Super Lawyers. He can be reached To read additional articles by Steven Plitt, go to More from Steven Plitt

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