Reversal: Insurer had duty to provide dental office full coverage

An insurer that for decades wrote policies for a dental office had a special duty to advise the office about coverage and ensure the office was fully covered, the Indiana Court of Appeals ruled Tuesday in reversing summary judgment in favor of the insurer.

The litigation arose after the Carmel offices of Dr. Stephen Lehman were destroyed by fire in 2009. The insurer paid the policy limit, but damages were in excess of the limit by more than $500,000. Even though the insurer notified the office of its policy limits, the court ruled that based on past practice, the insurer was obliged to make sure those limits were sufficient for full coverage.

The longstanding nature of the business relationship between the insurer and the office should have made it clear to the insurer that full coverage was expected, the court ruled in Indiana Restorative Dentistry, P.C. v. The Laven Insurance Agency, Inc., and Proassurance Indemnity Company, Inc. f/k/a The Medical Assurance Company, Inc., 49A05-1212-PL-627.

Marion Superior Judge Patrick McCarty granted summary judgment to Laven Insurance and Proassurance Indemnity, but the panel reversed and remanded for partial summary judgment for Indiana Restorative Dentistry.

“(W)e hold that (1) Laven was under a special duty to advise IRD about its insurance coverage based on their long-term relationship; (2) Laven had a duty to procure full coverage insurance based on its past dealings with IRD; and (3) there is a genuine issue of material fact as to whether Laven is ProAssurance’s agent and therefore ProAssurance can be held vicariously liable for Laven’s actions,” Judge Patricia Riley wrote for the panel that included Chief Judge Margret Robb and Judge James Kirsch.

“Consequently, we reverse the trial court’s summary judgment in favor of ProAssurance and grant summary judgment to IRD with respect to Laven’s duty to advise and duty to procure. Additionally, we reverse the trial court’s summary judgment with respect of ProAssurance’s vicarious liability and remand to the trial court for further proceedings."