The words and phrases found in an insurance policy

make it a hyper-technical legal contract

In their customary role as an insurance order-taker, the insurance producer is placed in a relationship with the customer similar to that of vendor and vendee. In this capacity, the duties imposed by such a relationship are to:

• Follow the customer’s directions, and;

• Act in good faith

In this role, the agent’s obligation is to exercise the skill level of a reasonably prudent insurance agent, which is known as the reasonable care and skill standard.

The level of the legal duty

Is the agent’s choice

When an agent represents herself as a skilled insurance specialist, she can create special circumstances upon which a higher duty is based. Consequently, an agent may have a duty to offer, furnish or advise regarding insurance coverage and services rather than merely following the customer’s instructions.

Professional liability litigation against insurance producers may arise out of the following:

• The fiduciary relationship

• Superior knowledge

• Due diligence

• Special relationships

• Special circumstances

• Voluntary assumption

• Breach of express or implied agreement

• The reliance of the insured upon the agent

• Misrepresenting the scope of insurance coverage

• Securing insufficient limits of liability

• Negligent supervision and training

Agents can choose to define the degree of their liability exposure and balance the benefits of providing professional services against the cost inherent in the liability system