The policyholder in the case has sued his broker alleging that the broker breached a professional duty of care by failing to bridge a gap in his medical malpractice coverage.

"In this case, the insured told his broker he needed coverage as of February 1 and that was not the case. He really needed coverage earlier than that. So the gap in coverage was caused by the insured's own intentional act in not paying his premium, which caused his policy to cancel--and then by not telling his broker that his policy had been canceled prior to February first," Ms. Muratori said.

Two of the three New Jersey Appellate Division justices who heard the case in Trenton found the broker did not breach any legal duty and the coverage gap was created solely by the intentional actions of the policyholder of which the broker was not notified.

The court held that a broker breaches no duty to an insured to affirmatively ascertain the existence of gaps in the insured's coverage and to advise him accordingly. However, one judge dissented, bringing the matter before the Supreme Court.

Ms. Muratori said if the high court were to rule against the broker in the case producers "legal obligations would be extended beyond the boundaries established through years of legal precedent."

She said if agents and brokers could not continue to rely on representations by the insured, it would mean they would have to make their customers come in and prove that what they are saying is true.

Such a requirement, said Ms. Muratori, would be "extremely burdensome and unfair."

PIANJ President John D'Agostino Jr. said in a statement that his group's legal action came because "PIANJ realized the far-reaching implications this case could have on producers and asked to be heard by the high court. In the amicus brief, PIANJ asserts that the appellate division appropriately declined to extend the legal obligation of agents and brokers beyond the boundaries established through years of precedent."

PIANJ said it supports the appellate court's finding that, absent notice or a specific initiating inquiry from the client, a producer has no affirmative duty to advise an insured of gaps in his insurance coverage.

PIANJ told the high court in its brief that an extension of the existing legal duty is unwarranted and would make agents and broker guarantors against coverage gaps. The case is expected to be heard by the Supreme Court in early 2004.

PIANJ is a trade association representing professional, independent insurance agencies, brokerages and their employees throughout the state.