ILNews

COA rules in negligent application process case

Back to TopCommentsE-mailPrintBookmark and Share

Addressing an issue today for the first time in state courts, the Indiana Court of Appeals had to determine whether a couple could sue their insurance broker for alleged negligence during the application process.

State courts have ruled on actions by an insured against an insurance company seeking recovery under a policy in cases such as Metropolitan Life v. Alterovitz, 214 Ind. 186, 196 14 N.E.2d 570, 574 (1938), but not in a case in which a person claims the insurance broker was negligent while filing out the application for insurance, leaving the person without any homeowner's insurance or specific coverage.

In Terence E. Brennan Jr. a/k/a Terry Brennan and Burt Insurance Co. v. Patricia and Harry Hall, No. 64A03-0811-CV-548, Terry Brennan and Burt Insurance Co. appealed the jury verdict finding them liable for negligently failing to procure insurance for the Halls.

Patricia Hall visited Brennan at his office and asked if he could get her homeowners insurance that specifically covered her dogs, including a Doberman pinscher; earthquakes; and a wood-burning stove. The insurance company Brennan selected for Hall doesn't provide insurance for Doberman pinschers; however, on the application, Brennan checked the "no" box to a question asking if the homeowner has any animals or exotic pets. Patricia, feeling rushed, signed the application without closely looking it over.

The Halls discovered they didn't have coverage for the dogs after their niece was bitten and they filed a claim with the insurance company, which was denied because the application didn't note they had a Doberman pinscher.

The Halls filed their own suit against Brennan and Burt Insurance, alleging negligence, breach of fiduciary duty, and constructive fraud by failing to acquire adequate insurance for the couple. The jury found Brennan and the company liable based on negligent failure to procure a policy. No damages were assessed because of a pending lawsuit between the Halls and the niece.

The 7th Circuit Court of Appeals addressed a similar issue in Roe v. Sewell, 128 F.3d 1098 (7th Cir. 1997), in which it limited the ruling in Alterovitz to cases by an insurance applicant directly against an insurance company. Alterovitz doesn't prohibit suits by an insurance applicant against an agent who may have been negligent in the application process, wrote Judge Michael Barnes.

"We hold that if an agent is negligent in assisting a client complete an insurance application, and such negligence leads to a basis for the insurance company to deny coverage to the applicant and/or revoke the policy, the applicant may seek damages from the agent, even if the applicant signed or ratified the application after having a chance to review it," he wrote.

The Court of Appeals affirmed the verdict.

The Court of Appeals did mention that Patricia may share some of the blame for the inaccurate application and as under Roe, it may be appropriate to assess her fault in accordance with the Comparative Fault Act. Brennan and Burt Insurance failed to make such an argument before the court, wrote Judge Barnes.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

ADVERTISEMENT