Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

Is The Insurer Obligated To Notify The Insured Of Any Inadequacy Of Automobile Liability Coverage?

The question of whether an insurance company had an obligation to provide advice to the insured on the adequacy of liability coverage was recently addressed by the Washington Court of Appeals in Junfang He v. Norris v. Farmers Ins. Co. of America, 415 P.3d 1219 (Wash. App. Div. I, 2018). In this case, the Washington Appellate Court found that there were insufficient grounds to support the insured's claim that the insurance company was responsible for inadequate bodily injury limits that the insured purchased.

This case involved a vehicle/pedestrian accident. The claimant demanded more than the insured's policy limits for the injuries. The claimant then sued the tortfeasor insured. The tortfeasor insured brought a third-party complaint against the insurance company, Farmers, and Farmers' agent, alleging negligence in providing inadequate automobile liability injury limits. Farmers filed a motion for summary judgment which was granted by the Court, dismissing the claims against Farmers and its agents. The insured argued that he had a long-standing relationship with Farmers and the agents, and had numerous interactions with Farmers and its agents on questions of coverage. The insured argued that he relied upon the agents' expertise, which created a duty for the agents to ensure that the bodily injury auto coverage limits were adequate. In response, the insurance company submitted the declarations of Farmers' agents, wherein the agents established that they did not receive compensation or consideration from the insured for any consultation or advice on issues involving coverage or policy limits. Moreover, the agents declared that the insured never discussed with them the auto liability coverage limits, and that the agents never recommended higher or lower liability limits to the insured.

The Court found that no special relationship existed between the insurance company and the insured motorist, and therefore the insurance company had no duty to review or provide advice to the insured on the adequacy of the insured's coverage. The Court noted that while the insured had a long relationship with the insurance company, the insured never asked the insurance company about the adequacy of the insured's coverage limits, nor did the insurance company provide any advice regarding the adequacy of those limits. As such, the Court held that Farmers had no duty to advise the insured on the adequacy of the insured's selected coverage limits.

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