One of the most unpleasant things you could discover in the aftermath of a loss, or upon learning of a potential insurance claim, is that your insurance broker either didn't purchase the right coverage, or failed to secure adequate coverage to cover the loss or claim.
If that is the case, you may have a potential claim against the insurance broker - at least under New York law. In fact, in this scenario, you have two (2) potential legal theories for pursuing your insurance broker: (1) breach of contract; or, (2) tort.
To that end, New York's courts have summarized this rule as follows:
"Generally, an insurance agent or broker has a common-law duty to obtain requested coverage for a client within a reasonable amount of time, or to inform the client of the inability to do so (see Murphy v Kuhn, 90 NY2d 266, 270; Verbert v Garcia, 63 AD3d 1149; Loevner v Sullivan & Strauss Agency, Inc., 35 AD3d 392, 393).
"Liability for failure to comply with this obligation may be based on either breach of contract or tort (see Jual Constr. Ltd. v A.C. Edwards, Inc., 74 AD3d 1150; Bedessee Imports, Inc. v Cook, Hall & Hyde, Inc., 45 AD3d 792; Mickey's Rides-N-More, Inc. v Anthony Viscuso Brokerage, Inc., 17 AD3d 328)."
"OK," you say. "So how do I prove my case against the insurance broker?"
Fortunately, New York's courts have provided guidance on this issue as well, although the rule does appear (perhaps deliberately) somewhat vague:
"An insured must show that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction (see Jual Constr. Ltd. v A.C. Edwards, Inc., 74 AD3d at 1150; Bedessee Imports, Inc. v Cook, Hall & Hyde, Inc., 45 AD3d at 793-794; Mickey's Rides-N-More, Inc. v Anthony Viscuso Brokerage, Inc., 17 AD3d at 329)."