Arizona high court decision means more litigation against agents
Because malpractice claims are personal, courts will usually not allow them to be assigned to a third party. The Supreme Court of Arizona decided that the general rule does not apply to insurance agents and that the victim of insurance agent malpractice may assign the claim to a third party.

The decision will probably increase litigation against insurance agents and brokers in Arizona and any other states that adopt its decision.
Regardless of the possibility of increased litigation against insurers, the case suggests that the suits will be difficult for the plaintiffs to prove. They will not be able to collude in setting high judgments binding on the agent. The agent's duty to the insured is limited in Arizona to less than that of a fiduciary. The agent owes only a duty of “reasonable care, skill and diligence” in dealing with clients. In an appeal from the Superior Court in Maricopa County, Ariz., the Arizona Supreme Court concluded that under state law, an insurance agent's clients may assert claims for professional negligence against the agent and may assign such claims to third parties.
The case arose after Neal and Gail Berliant bought a liquor store called The Liquor Vault in 2000. To insure themselves, they purchased a business and umbrella liability policy from Victoria Gittlen, a licensed insurance agent. The Berliants alleged that Gittlen did not advise them that they could also purchase liquor liability coverage.
In 2001, The Liquor Vault sold beer to a minor who gave it to another minor. The second youth drove his car into a cement barrier, killing his passenger. The passenger's father, D. Jer? Webb, filed a wrongful death claim against the Berliants and The Liquor Vault. The Berliants tendered the claim to their insurance company, which properly refused to defend because the Berliants lacked liquor liability coverage.
To settle the wrongful death claim, the Berliants stipulated to the entry of a $3 million judgment. Webb agreed not to execute on the judgment, and in exchange the Berliants assigned to Webb their rights to sue both their insurer and their insurance agent and her employers. Webb then sued Gittlen, G&G Insurance Service Inc. and CDS Insurance Agency LLC, alleging negligence and breach of fiduciary duty. The trial court dismissed these claims, citing Premium Cigars International Ltd. v. Farmer-Butler-Leavitt Insurance Agency, which held that claims against an insurance agent for professional negligence are not assignable.
The court of appeals affirmed in a memorandum decision that also relied upon Premium Cigars.
The Arizona Supreme Court, moving in a new direction, considered state case law that generally allows the assignment of unliquidated legal claims except those involving personal injury. The broad prohibition on assignment exemplified the common law view that litigation was vexatious or otherwise socially undesirable. The reasoning was stated by Lord Coke in 1613: