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How to avoid liability to third parties

Can agents and brokers be liable to strangers, that is, people and businesses with whom they have no relationship at all, who never paid a premium on a policy they placed, and to whom they made no promises and had no communications? Can there be a duty without any relationship,...

By Louie Castoria | Updated on June 16, 2015

Philosopher Jim Morrison of The Doors observed, “People are strange when you’re a stranger.” Indeed, strange things can happen to an insurance agent or broker when a complete stranger makes a claim for damages because his or her actual customer did not have needed insurance coverage.

In a column last year we examined the notion of a “special relationship” between an insurance professional and a customer. It’s a term used by some courts as a litmus test to decide whether the broker owes a duty to recommend needed insurance coverage or higher limits to the customer. (Read: “Client relationships: the good, the bad, and the worse”)

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Louie Castoria

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