This month's case, Sewell v. Great Northern Insurance, establishes that an insurance agent only needs to fulfill duties actually assumed and that unless he makes specific promises, he is not obligated to an insured.

In Sewell v. Great Northern Insurance Co. (No. 07-1255 [10th Cir. 07/31/2008]), the 10th Circuit found on behalf of a broker who did not assume the duty claimed by the insured. The court addressed the question of whether a broker should advise an insured to procure excess UM/UIM coverage in an umbrella policy in addition to coverage selected in the underlying automobile policy. The federal court concluded that Professional Lines Insurance Brokerage Inc. (PLI) had no such duty.Case BackgroundThe umbrella policy acquired was an "excess liability onlyobCrLf form. Marla Sewell, the plaintiff, read the materials, signed the policy application, and returned it without making any changes. No one at PLI discussed UM/UIM coverage with Sewell and she never asked to discuss it. Sewell renewed the policy in 2002, 2003 and 2004. Sewell was the only family member to speak with PLI representatives.In late 2003, Sewell contacted the agent, Mary LaHeist, after receiving a letter from PLI indicating that her personal injury protection (PIP) coverage would be eliminated from her policy because Colorado had eliminated its no-fault automobile liability law. LaHeist told Sewell she believed Sewell did not have to increase any of her coverages. After Sewell asked whether her umbrella coverage would "kick in,obCrLf LaHeist said yes. Sewell never specifically mentioned UM/UIM coverage or requested any review of her coverage other than with respect to PIP. She simply "was hoping [LaHeist] would bring up any particular needs that [she] needed met.obCrLfOn Dec. 5, 2004, during a high-speed chase, an escaping felon hit Sewell's husband. He died of his injuries. Marla Sewell filed a claim for excess UM/UIM benefits under the umbrella policy with Great Northern, but was denied because she never purchased the coverage. Sewell then filed this action on behalf of herself and her minor daughter, asserting breach of contract/reformation; negligent misrepresentation; breach of fiduciary duty; breach of the duty of good faith and fair dealing; and deceptive trade practices. All of the allegations failed and, after a motion by PLI, the district court granted summary judgment for PLI on all claims. JudgmentThe district court held there was no breach of contract because the Sewells received what they requested: an umbrella policy with no excess UM/UIM coverage. The district court reasoned PLI had no "special relationshipobCrLf with Sewell requiring it to advise or warn Sewell concerning her coverage, and reformation of the contract would be inappropriate given Sewell's unilateral assumption that she had UM/UIM coverage. PLI made no negligent misrepresentations because no false information was conveyed by PLI to the Sewells. PLI did not have a fiduciary duty to breach because it had an ordinary insurer-insured relationship with the Sewells. PLI did not breach duty of good faith and fair dealing because the Sewells had no private cause of action under state law, which only applies to insurers. The district court held the Sewells could not prove any deceptive trade practices because they had not demonstrated that any allegedly deceptive practice affected the public.In Colorado, insurance agents have a duty to act with reasonable care toward their insureds, but, absent a special relationship between the insured and the insurer's agent, that agent has no affirmative duty to advise or warn his or her customer of provisions contained in an insurance policy. Whether a special relationship has been formed turns on whether there is "entrustment,obCrLf that is, whether the agent or broker assumes additional responsibilities beyond those that attach to an ordinary, reasonable and prudent agent.The 10th Circuit agreed with the district court and said because LaHeist made no false statements, the Sewells cannot prove a claim of negligent misrepresentation. The Sewells failed to point to anything in the record to support their assertion that LaHeist "assured [them] that their UM/UIM coverage would cover the gap in coverage.obCrLfThe Sewells contended that PLI breached a fiduciary duty it owed them, asserting PLI had a duty "to notice the omissions in the application, correct the errors or ambiguities in the Policy, or otherwise advise the Sewells who were relying upon PLI for its expertise.obCrLf To prove breach of fiduciary duty, the Sewells needed to prove the defendant acted as a fiduciary of the plaintiff, breached a fiduciary duty to the plaintiff, that the plaintiff incurred damages, and that the defendant's breach of fiduciary duty was a cause of the plaintiff's damages.The 10th Circuit agreed that PLI did not breach any duty it owed the Sewells. The standard relationship the Sewells had with PLI only requires PLI to obtain the specific coverages Sewell requested and answer any questions she brought to its attention.