Wisconsin Supreme Court Rules in Favor of Insurance Agency
In Emer’s Camper Corral, LLC v. Jensen-Sundquist Insurance Agency, the Wisconsin Supreme Court ruled that the Jensen-Sundquist Insurance Agency was not negligent in obtaining Emer’s Camper Corral’s garage liability insurance policy with higher deductibles than it requested.
In this case, Camper Corral alleged that the Agency told Camper Corral that it had obtained a policy with a deductible of $1,000 per camper, with a $5,000 aggregate deductible limit. Instead, the policy had a $5,000 deductible per camper with no aggregate limit, which Camper Corral learned after a hail storm damaged a number of its campers. The Agency disputed Camper Corral’s allegations, and asserted that it had correctly informed Camper Corral about the deductibles.
Camper Corral claimed the Agency was negligent because it procured a policy with higher than the requested deductibles. To prove the Agency was negligent in procuring an insurance policy, Camper Corral must establish that (1) the Agency had a duty of care to the insured; (2) the Agency breached that duty; (3) the breach caused the injury; and (4) there was actual loss or damage from the injury.
The duty of care in Wisconsin is that an insurance agent has a duty to exercise reasonable skill and diligence in the transaction to which he or she is entrusted. When an insurance agent fails to act with reasonable care, skill, and diligence in procuring coverage he or she agreed to procure, the agent has breached his or her duty to the insured. The issue before the Supreme Court was whether the Agency’s alleged breach of this duty of care caused an injury to Camper Corral.
The Wisconsin Supreme Court affirmed the trial court’s determination that Camper Corral failed to show the Agency’s breach of the duty of care caused Camper Corral’s loss. The trial court concluded that the Agency could not have caused the loss because there was no evidence that Camper Corral would have qualified for the policy with lower deductibles. In affirming the trial court, the Wisconsin Supreme Court held that “commercial availability is insufficient to establish causation; Camper Corral must also prove it would have qualified for an insurance policy with better terms than the policy it actually obtained.”
This is an important case for insurance agencies because it draws a bright line as to when an agency may be liable for negligently procuring coverage. To prove that an agency is liable for not procuring requested coverage(s), an insured must not only show that the agency breached its duty of care, but that the insured would have actually qualified for the requested policy. A mistake by an agency will not lead to liability if the insured was not qualified to obtain the coverage in the first place.