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Fortify Loss Control

N.Y. ruling makes it easier for insureds to sue agents

By Matthew S. Marrone, Esq., Colleen M. Murphy | Updated on January 31, 2013

On Nov. 19, 2012, the New York Court of Appeals in American Building Supply Corp. v. Petrocelli Group Inc. et al. ruled for the first time on the issue of whether an insured’s receipt of the insurance policy without complaint barred an E&O claim against an insurance agent or broker. The Court of Appeals concluded that “The [insured’s] failure to read the policy, at most, may give rise to a defense of comparative negligence but should not bar, altogether, an action against a broker.”

The ruling is a significant decision that is likely to influence other jurisdictions. It is a call to insurance agents and brokers to revisit and fortify their loss control procedures. Consideration should be given to working with their E&O insurers and/or E&O attorneys to tailor procedures to the particular business of the insurance agency or brokerage.  

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