Plaintiff Had No Right to Rely on a Certificate of Insurance

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A suit against an insurance broker for failing to acquire insurance was defeated with a motion for summary judgment because the plaintiff incurred no damage as a result of the alleged failure and because the plaintiffs failed to allege the elements of fraud.

In Devair Da Silva v. Champ Construction Corp., A. Logan Insurance Brokerage, et al., 186 A.D.3d 452, 128 N.Y.S.3d 582, 2017-10174, Index No. 506852/13, Supreme Court, Appellate Division, Second Department, New York (August 5, 2020) the appellate court resolved the dispute.

FACTS

The plaintiff sued to recover damages for personal injuries he allegedly sustained in a construction-site. His employer, Champ Construction sued an insurance broker. Champ Construction alleged that the agents agreed to procure workers’ compensation coverage for the construction project, yet failed to do so.

ANALYSIS

Champ Construction failed to allege or present evidence that showed the existence of an agreement by the third-party defendants to procure workers’ compensation insurance for this project, nor that the third-party defendants specifically undertook a duty to procure such an insurance policy.

Notwithstanding the lack of workers’ compensation insurance, the plaintiff received benefits from the general workers’ compensation fund relating to this occurrence. Champ Construction produced no evidence to the contrary. The record showed, as a matter of law, that any failure to procure insurance did not proximately cause damages to Champ Construction.

Champ Construction failed to show, prima facie, that the third-party defendants made a material misrepresentation of fact as to the procurement of insurance. Moreover, the certificate of insurance that was purportedly issued by the third-party defendants provided that it was “issued as a matter of information only and confer[red] no rights upon the certificate holder.” 

ZALMA OPINION

To pursue a claim against an insurance agent for failing to acquire insurance ordered it is necessary to allege and prove that an order was made, that the insurance was not obtained and that the plaintiff was damaged as a result of the failure. Since the evidence established that the plaintiff was not damaged no action could survive. The  certificate “conferred no rights on the certificate holder” there was no reason to rely on the certificate.

© 2022 – Barry Zalma

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