Conversely, retail brokers who maintain these relationships can, in turn, market their abilities to place such risks directly to insureds. But does this approach carry additional exposure to insurance brokers as well?

Most often, brokers are sued when something goes wrong for the insured and he realizes that he has no coverage for the resulting losses. The insured typically claims that the broker should have more fully explained the insured's existing coverages and recommended additional insurance that, in hindsight, would have covered the loss.

Common scenarios facing insurance brokers are "failure to recommend" or "failure to advise" cases where the client contends (after the fact) that he wanted "full coverage" or "the best coverage," regardless of cost. Quite often, the client will assert he relied upon his broker's advice for "all of his insurance needs." How do courts interpret a broker's duty under these circumstances?

Generally, a broker is not automatically required to recommend or explain insurance coverages to her client. But when the broker has taken it upon herself to counsel her client about specialized insurance coverages, held herself out as an expert to her client, or received extraordinary compensation from her client for services provided, a jury may be allowed to consider whether recommending or explaining coverages to her client falls within the scope of her agency, and thus her duty owed.

It is wise to focus as an insurance agency in certain areas where knowledge and experience exist—and, where practical and permitted, to use this for marketing initiatives. But in malpractice or E&O cases, one of the first issues considered is whether the allegedly negligent services provided were within the scope of what the broker agreed to provide. When possible in these cases, I argue that an insurance broker has no duty to recommend coverages to an insured.

However, when a broker holds himself out as a "specialist" in a certain area, and then counsels a client on an insurance program related to that area, it becomes more difficult to argue that the broker did not have a duty to recommend coverages that are appropriate for the risk. This may seem axiomatic and perhaps a bit trivial to many of you, but in the context of the defense of an E&O lawsuit, your "specialization" could effectively come back to haunt you.