National Underwriter is highlighting independent agentsand brokers in this issue, so let's declare today Independents'Day!

The cases I've seen fall into two main groups: failure to placecoverage and to exercise independent judgment. Here, I'm focusingon the second type from the plaintiff's point of view. Next time,we'll look at the defendant's side.

If the professionals offer only the products of the one insurerwith which they are contracted (a captive or career agent) theagent is not independent. But many agents have nonexclusive agencyagreements with multiple carriers and may also act as brokers inrepresenting applicants to insurers with which they have no agencyagreements.

When a policyholder files an E&O claim, thefocus is on the functional definition of independence: Was theprofessional trying to procure the best coverage terms for theclient's known needs at the best available price? Or, did theprofessional's loyalty to anyone other than the client, includingself-interest, cause the agent to detour from that goal? Was theresult an insurance policy that didn't cover the client's knownneeds, or covered them less adequately than other availablepolicies at or near the same premium?

Promises, Promises

For plaintiff's counsel, the easiest way to define the standardof care to the client is show what the agent or broker promisedin writing to do.

For this article only, I'm using as an example the IndependentInsurance Agents and Brokers of America, Inc. (IIABA), whichstates on its website:

Whether you are searching for Personal or Business insurance, aTrusted Choice® Independent Agent is free to shop multipleproviders on your behalf. More freedom means more options and moresavings for you.

The IIABA's Pledge of Performance says that Trusted Choice®agents will, among other things:

• Work with you to identify the insurance and financial servicesthat are right for you, your family or your business and use ouraccess to multiple companies to deliver those products.

• Guide you through the claims process for a prompt and fairresolution of your claim.

• Use our experience and multiple company relationships tocustomize your coverage as needed.

This well-written and comprehensive pledge of service tocustomers is also a blueprint for building the plaintiff's case.Here is the way they might be challenged in an E&O claim:

• "Use our access to multiple companies[.]" What if only oneoption for coverage was presented, when another one with a smallerpremium was also available?

• "Identify the insurance and financial services that are rightfor you, your family or your business[.]" What if the agent islicensed to sell insurance, not securities?

• "Guide you through the claims process for a prompt and fairresolution of your claim." Agents and brokers can provide guidanceand some advocacy, but they can't generally write checks oninsurers' bank accounts. Prompt, fair resolutions are the goal, butare outside the agent/broker's control.

• "Customize your coverage as needed[.]" Insurance policies oftenneed customizing. For example, it may be impossible to find ajeweler's block policy that covers off-site sales or inventory indisplay cases overnight.

Issues such as these are not unique to the IIABA's highstandards. What coverage is "needed" depends on who isspeaking.

If it's the broker, who wasn't told about the applicant'shome-based business, a rider or separate policy for that businessdidn't seem "necessary" when the homeowner's policy was placed. Ifthe speaker is the policyholder on the day after an uncoveredbusiness loss, the "necessity" of the coverage is clearer inhindsight.