Court rules that an independent insurer may owe a duty to the insured in giving advice
In the recent National Association of Investors v. Dobson-McOmber Agency case, the Court of Appeals overturned the lower court's dismissal of the Plaintiff's negligence claim against its insurance agent. In a previous case, the "Engler Majority" of the Michigan Supreme Court had held that insurance agents are mere sales staff for the insurer and owe no duty to advise an insured. The lower court applied this ruling to independent agents who were not directly affiliated "captive agents" with a particular insurer, and also ruled that the agency defendant had assumed no "special duty" to the Plaintiff.
The Plaintiff appealed, claiming that both rulings were in error. The Court held that it did not need to address the former issue involving independent as opposed to "captive" agents, because the Plaintiff had presented adequate evidence to create a factual issue regarding the existence of a special duty to the insured. A special duty is created when the agent "misrepresents" the coverage; when it does not clarify an "ambiguous request;" when it gives inaccurate advice; or when it assumes an additional duty by agreement or promise.