Fail to Read the Policy at Your Peril

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Insurance Producer Only Required to Place Insurance Ordered

Post 4747
Never Assume You Are Covered

Five Waters Properties, LLC, appealed the trial court order granting defendants, Mark Bone and Bailey Agency Inc, summary disposition.

In Five Waters Properties, LLC, v. Mark C. Bone and Bailey Agency Inc., No. 366075, Court of Appeals of Michigan (February 22, 2024) the Court of Appeals resolved the dispute.

BASIC FACTS

The failure of the Edenville Dam and subsequent failure of the Sanford Dam in May 2020, resulted in a devastating flood that caused substantial damage to homes and businesses in Midland County, Michigan. Five Waters was one of the businesses affected by the flooding.

Five Waters’ commercial insurance policy was renewed and each year they received correspondence inviting them to schedule a review of Five Waters’ policy. They did not do so.

ANALYSIS

To establish a prima facie case of negligence, a plaintiff must prove four elements: a duty owed by the defendant to the plaintiff; a breach of that duty; causation; and damage.

Generally, an insurance agent owes a duty to procure insurance coverage requested by an insured. Because there was no special relationship the Court of Appeal concluded that defendants did not have a duty to advise Five Waters as to the adequacy of its coverage.

The trial court properly granted summary disposition for defendants. The trial court correctly determined that defendants did not owe Five Waters a duty to assess and ensure the adequacy of the business insurance coverage and Five Waters failed to establish a special relationship that gave rise to a duty.

ZALMA OPINION

When insureds suffer a loss that is not covered by the policy they purchased they seem intent on suing the insurance producer who failed to force the insured to purchase a policy that would cover the loss different from the policy they purchased. They sue the insurance producer and find that case law in almost every state only requires the producer to place the insurance required. Although the producer asked the Plaintiff to review their coverages because of potential flood risks they did not until their property was damaged by a flood. Too little too late.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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