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