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The Rogak Report: 06 July 2004 **Broker Liability - Certificates of Insurance **

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  • therogakreport
    BROKER WHO ISSUED CERTIFICATE OF INSURANCE SHOWING COVERAGE WHERE NONE EXISTED HAS NO LIABILITY TO THIRD PARTIES WHO RELIED ON IT Greater New York Mutual
    Message 1 of 1 , Jul 6, 2004
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      BROKER WHO ISSUED CERTIFICATE OF INSURANCE SHOWING COVERAGE WHERE
      NONE EXISTED HAS NO LIABILITY TO THIRD PARTIES WHO RELIED ON IT

      Greater New York Mutual Insurance Company v. White Knight Restoration
      et al., 776 NYS2d 257 (1st Dept 2004)

      A property owner and contractor sued the subcontractor's insurance
      broker, seeking damages for the broker's failure to procure coverage
      naming them as additional insureds, and for producing certificates of
      insurance which incorrectly indicated that they had been so named.
      Supeme Court, New York County, dismissed the Complaint. The
      Appellate Division affirmed.

      "Summary judgment was properly granted to the subcontractor's
      insurance broker... since the broker was under no duty to the
      property owner and contractor. Regardless of whether the broker
      acted recklessly, the causes of action for fraud and negligent
      misrepresentation, based on the inaccurate certificates, were
      properly dismissed because it was unreasonable to rely on them for
      coverage in the face of their disclaimer language and, with respect
      to the negligent misrepresentation claim, because of the absence of a
      relationship approximating privity," held the Appellate Division.

      Comment: This is not the first case we have reported where a
      certificate of insurance, issued by a broker, falsely reflected
      coverage where none existed. Only confirmation of coverage from the
      insurance company itself, or its authorized agent, will ensure that
      coverage actually exists.
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