Broker had no duty to be truthful with insurer but can be sued for fraud

An agent in Indiana arranged insurance for a family-owned business that restored and repaired recreational vehicles. The agency for which the agent worked also wrote personal-lines insurance for the insureds and had a relationship with them going back to the early 1980s.

The insurance written for the family-owned business initially did not cover any vehicles. However, to help the insureds obtain relatively low-cost automobile insurance for their teenage son, the agent suggested that the son lease his 1995 Chevy pickup truck to the business. The agent provided the lease to the insureds, and they executed it. The lease required the family-owned business to provide the son with insurance when he drove the pickup. The agency requested the insurer to amend its policy to cover the son as a driver of the truck, indicating that he would use the pickup to transport vehicle parts and supplies for the family-owned business. Accordingly, the carrier added an insured-lessor endorsement to the policy, covering the son as a driver.

In March 1998, the son sold the 1995 Chevy pickup and bought a 1998 Ford Mustang GT. The son executed another lease, with the same terms as the former one. The agency notified the carrier, asking it to delete coverage for the Chevy pickup truck and add it for the Mustang GT. The insurance company issued an amended policy declaration acknowledging the change in vehicles. However, it also deleted the lessor-insured endorsement. The agency did not detect the deletion and consequently did not advise the insureds that the policy on the family-owned business no longer covered their son.