Ken Finch Jr., is a self-employed logger who is also engaged in the business of putting on rodeos.
In connection with this business, Finch owns bulls and other animals, as well as trucks and trailers. Back around 2006, Finch began obtaining insurance from defendant Steve Cardell Agency, a New York insurance agency of which Steven I. Cardell is president. Finch obtained liability insurance for rodeos by contacting Cardell before each show. Cardell would then procure coverage for the event and provide Finch with an insurance certificate.
In August 2012, Finch contacted Cardell to obtain coverage for an upcoming rodeo in Pennsylvania. The transaction was handled by an office assistant. The carrier that had previously provided Finch's rodeo insurance declined to cover the event (apparently because of its location in Pennsylvania), and the assistant instead found what she believed to be equivalent coverage issued by a different carrier, Atlantic Casualty Insurance Co.
At the conclusion of the Pennsylvania rodeo, four bulls escaped from a group that was being moved from a holding pen through a system of gates immediately prior to loading into Finch's trailer. Several bystanders were injured before the animals were recaptured, and lawsuits were filed against Cardell as a result. When Finch advised the defendant of the incident, Cardell reviewed the Atlantic Casualty policy and discovered that it contained an exclusion for injuries or damage caused by animals. Thereafter, Atlantic Casualty declined coverage, relying on the animal exclusion and also on a policy exclusion for losses arising out of the use of an “auto” (the auto exclusion), which the policy defined to include loading and unloading operations.
Finch commenced this insurance malpractice action in Finch v. Steve Cardell Agency, alleging that Cardell was negligent in procuring a rodeo insurance policy with an animal exclusion.
|Case analysis
The Supreme Court of New York determined that Cardell's potential negligence was not the proximate cause of Finch's loss, as his claim would have been denied based upon the auto exclusion. Finch had alleged that Cardell negligently failed to advise him of the “gap in coverage” created by the auto exclusion, and that this failure resulted in his lack of coverage.
Although an insurance agent's common-law duty to his or her clients does not include a continuing duty to advise the clients on appropriate coverage or to recommend additional coverage that the clients did not request, an agent may be liable for failing to provide appropriate advice in circumstances in which there is a “special relationship.” As pertinent here, such a relationship may arise when there is a course of dealing over an extended period of time.
Finch testified that he had purchased his business and personal insurance from Cardell for at least six years, that he knew little about insurance and that he relied upon Cardell to obtain the appropriate coverage for his rodeo operations. He stated that he had never seen any of the rodeo insurance policies that Cardell procured on his behalf, that insurance certificates were the only documents ever provided to him, and that “with [Cardell] being my agent for years, I took that as he was representing me and making sure that I was covered.”
Nothing in Cardell's testimony contradicted Finch's allegations that he relied upon defendant to procure adequate coverage, or that defendant had not advised him of any need for additional protection because of the auto exclusion.
The evidence raised triable issues of fact as to whether the plaintiff and defendant had a special relationship and, if so, whether the defendant proximately caused Finch's loss by negligently failing to advise and guide him in obtaining adequate insurance coverage for all aspects of his rodeo operations, including his trailers. Therefore, Cardell's cross motion for summary judgment dismissing the complaint should not have been granted.
Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance coverage, claims handling, bad faith and fraud. Contact him at [email protected].
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