Torts: Negligence Claim Against Insurance Agent

Wilks v. Manobainco, 691 Ariz. Adv. Rep. 15 (App. July 22, 2014) (J. Norris)

TO OBTAIN UIM COVERAGE WHERE INSURED ASKED FOR “EXACT SAME COVERAGE AS BEFORE” WILL STAND EVEN IN FACE OF SIGNED “DOI” FORM BY INSURED DECLINING COVERAGE

In 2001 the plaintiff contacted the defendant insurance agency and requested “full coverage” on her and her husband's two cars. Uninsured [UM] and Underinsured [UIM] coverage was obtained. In 2003 the plaintiff switched to another insurer through defendant and again was provided UM and UIM coverage.  In  2004 the plaintiff again switched carriers through the defendant agency and stated, “'I wanted the same insurance back. . . . I asked for the exact same coverage that I'd had previously, full coverage,' which would have included UM and UIM coverage. In response, the Agency told [plaintiff] ‘they would give me the exact same coverage I had before.'” Plaintiff further claimed that thereafter she went to the defendant's office where she was asked to sign and initial a “bunch of documents” none of which she read. One such document was the Department of Insurance [DOI] form declining UM and UIM coverage.   Thereafter, the plaintiff was injured by a negligent underinsured driver. When her UIM claim was denied based upon her signing the DOI form she sued the agency for professional negligence. The trial court granted the defendant summary judgment finding the agents compliance with ARS sec.  20-259.01(B) by obtaining a signed DOI form met the standard of care as a matter of law. The Arizona Court of Appeals reversed and remanded.   Here the court of appeals found a question of fact was created by the plaintiff's expert testimony that the standard of care requires the agent review the prior coverages and assure that the same coverages are offered in the new policy whenever an insured requests “the same exact coverage as I had before.”  While the insured's failure to read the documents and especially the DOI form before signing them also creates a question of fact as to the plaintiff's comparative fault it does not absolve the agent from potential liability for its claimed negligence.   Additionally the court noted that while ARS sec. 20-259.01(B) protects and “insurer” from liability in failing to provide UM or UIM coverage if it obtains the insured's signature on a DOI form, the statute says nothing about offering such protection to an “insurance agency”  against a professional negligence claim. In fact, only insurers and not insurance agents are required to offer the UM and UIM under the statute in the first place. ARS sec. 20-104 (2002) defines insurer as "every person engaged in the business of making contracts of insurance." Insurance agents clearly do not make insurance contracts. Further, the statute in 1997 did include “agents and brokers” in its definition of who was protected by offering the DOI form. However in 1998 the legislature repealed this statute later enacting a new statute (ARS sec 20-259.01), excluding  “agent and broker” thus demonstrating clear legislative intent not to protect agents and brokers through the execution of the DOI form.   Finally, the court found that even if ARS sec 20-259.01(B) did offer some protection to agents and brokers (other than the right to claim comparative fault) the claim here would still stand. The plaintiff's claim here is not that the agent failed to adequately explain what coverages she was getting and what coverages she was rejecting. The claim was that the agent was negligent in not placing the full coverage requested regardless of what was or wasn't explained.