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You Can’t Get What You Don’t Ask For: 

U.S. Fifth Circuit Declines to Impose “Heightened Duty” on Insurance Agents and Brokers to Procure Coverage Not Specifically Requested by their Customers

Insurance agents and brokers play a key role in connecting insurance companies to their policyholders. In Louisiana, insurance agents and brokers owe a duty of reasonable diligence to their customers, which is satisfied when they procure the insurance coverage that their customers request. But does that duty also require agents and brokers to advise their customers about whether they need to obtain additional coverage beyond what was requested? The U.S. Fifth Circuit recently held that it does not in Coleman E. Adler & Sons, L.L.C. v. Axis Surplus Insurance Company.

The plaintiff in Adler & Sons owned jewelry stores and event spaces in New Orleans. He was forced to close those businesses in response to government orders that required “non-essential” businesses to close at the outset of the Covid-19 pandemic in early 2020. He attempted to recover the income he lost during the closure under his insurance policy’s coverage for “direct physical loss of or damage to” his property. His insurer denied the claim. The plaintiff then sued his insurer, his insurance agent, and his wholesale broker, asserting that his insurer wrongly denied coverage and that his agent and broker failed to advise him of pandemic-related coverage. The district court dismissed all of the plaintiff’s claims, and the Fifth Circuit affirmed the district court’s dismissal on appeal.

Addressing the plaintiff’s claims against his agent and broker, the Fifth Circuit rejected the plaintiff’s argument that his agent and broker owed a “heightened” duty to advise him about the need to obtain pandemic-related coverage. The court recognized that under Louisiana law, the only duty imposed on an insurance agent is to obtain the coverage that its customer requests. The court explained that it is the insured’s––not the agent’s––responsibility to request the type of insurance coverage needed; as such, the agent has no obligation to spontaneously or affirmatively identify the scope or the amount of coverage that its customer requests. The court also rejected the notion that an insured’s “close relationship” with his agent or broker creates a “heightened duty” to anticipate the customer’s needs or recommend specific coverage. As a result, the court concluded that the district court correctly dismissed the plaintiff’s claims against his agent and broker for failing to advise him of pandemic-related coverage because he did not allege that he specifically inquired about pandemic-related coverage.

While Adler & Sons concerned an issue relating to coverage for losses during the Covid-19 pandemic, the Fifth Circuit’s decision is a sigh of relief for all insurance agents and brokers in Louisiana. Indeed, Adler & Sons confirms that the insured is ultimately responsible for picking the type of coverage that he or she wants. Agents and brokers have no duty to independently assess the needs of the insured and recommend certain coverages. Rather, they are only responsible for using reasonable diligence in attempting to secure the type of coverage that their customer requested. Insureds should be mindful of Adler & Sons when shopping for insurance coverage, and remember that “you can’t get what you don’t ask for.”