Jonathan L. Schwartz, a partner in Goldberg Segalla’s Global Insurance Services Practice Group in Chicago, provided commentary for Law360 in an article exploring the impact of a recent Illinois Supreme Court decision in which the court held that insurance agents owe a duty of care in obtaining coverage requested by policyholders. The decision, Law360 noted, shuts down a powerful argument agents used to avert liability for negligence.
Jonathan said he thought the Illinois Supreme Court conflated the concepts of an agent and a broker in its ruling, in which the court determined that the term “insurance producer” as used in the Illinois Code of Civil Procedure can be read to encompass both agents and brokers.
“The two have different motivations, loyalties, and intentions,” Jonathan told Law360. “I think the court is taking too literal a reading of the statute and ignores key distinctions between agents and brokers.”
Jonathan noted that if the case is limited to its particular factual circumstances, the court’s decision may appear reasonable, but the court’s reasoning is “susceptible to misapplication” in the context of commercial insurance. In that context, he pointed out, there may be multiple entities in between the policyholder and the insurer. “To start allowing a policyholder to pierce through those layers to get through to their insurer’s agent is a pretty dangerous precedent to set. … This ruling allows policyholders to do more than they did before.”
Jonathan suggested that, in a situation where the policyholder is permitted to sue the insurer’s captive agent, “the policyholder should owe a greater or heightened duty to read its policy very carefully.”