Insurance agents and their authority
In a recent Wayne County case, the Michigan Court of Appeals addressed the limits of authority of an insurance agent. In Briko's Market v. Emerson-Prew, Inc., a market suffered a loss of refrigeration and a significant loss of inventory. They thought they were insured for such an eventuality, however, it turned out that their agent had never obtained a written binder for coverage on their market.
When the owners went to the Oakland Insurance Agency to purchase insurance, Oakland's employee told them they had bound coverage, but did not comply with the insurer's requirements (i.e., submission of a twenty percent deposit, photos of the property and certain financial information). The court concluded that even if Oakland was an agent of the insurance company, it had exceeded its authority by binding coverage without meeting these requirements. Therefore the insurer owed nothing on the inventory loss.
The insurer had also argued that Oakland Agency was not its agent and that Oakland was solely the agent of the insured. In prior cases, the Michigan Supreme Court has held that an insurance agent is not normally the agent of the insured, and the agent's sole agency obligation is to sell as much insurance as it can for the insurer: apparently a Michigan insured is damned either way, which seems to be a succinct statement of the state of the law in Michigan.