According to the Wisconsin Court of Appeals, to assert an insurance agent’s liability for negligent failure to procure requested coverage, the customer must establish that the coverage requested was actually available.
In Emer’s Camper Corral, LLC v. Alderman, 2019 WL 1246422 (Wis. App. 3/19/19) the customer owned Emer’s Camper Corral, which is a business that sold new and used campers. The insurance policy in question was purchased in 2007, which insured Camper Corral’s inventory with an associated $500 per unit deductible for hail damage. The policy was annually renewed for several years. Then, in May 2011 a hailstorm caused damage to Camper Corral’s inventory. The insurer paid the claim for hail damage and then renewed the policy with the same $500 per unit hail damage deductible. A second hailstorm damaged Camper Corral’s inventory. The claim was paid and then the policy was not renewed. Because of this, the insurance agent secured a replacement policy from a different insurer. The replacement policy had a hail damage deductible of $5,000 per unit. A third hailstorm occurred which damaged 25 units of Camper Corral’s inventory. Following the third hailstorm, the insured claimed that she had received the first copy of the replacement policy and further learned that there was a $5,000 per unit deductible. This left a shortfall in the insured’s loss.
The insured alleged that the agent had told her that if Camper Corral did not submit a hail damage claim during the next policy year, that the agent could obtain a policy with a $1,000 per unit deductible. The insured further alleged that the agent told her that the policy in force at the time of the hailstorm had been renewed with a hail damage deductible of $1,000 per unit and a $5,000 total deductible cap.
Because of the loss shortfall, Camper Corral sued the agent for failure to procure a policy with a $1,000 deductible and a $5,000 deductible aggregate limit. The case went to trial. At the close of the evidence, the court granted a directed verdict in favor of the agent. The court found that Camper Corral failed to establish that the agent’s alleged negligence caused damages because Camper Corral failed to establish that an insurance company would have insured Camper Corral under a policy with a $1,000 deductible per camper and a $5,000 deductible aggregate limit. On appeal, the Wisconsin Court of Appeals affirmed the trial court’s ruling. In doing so, the appellate court held that for an insurance agent to be liable under a theory of negligent failure to procure, the insured was required to establish that an insurance policy could have been obtained on the requested terms that the insured sought.