Insurance brokers do not have a duty to inspect a business property to offer flood insurance, according to a ruling handed down this week by an appeals court in in Pennsylvania.

The case stems from a Millersburg business that obtained a commercial policy in 1994 through the Brown and Brown Insurance Co., Tampa, Fla., and suffered a flood five years later.

When the business, Saturn Surplus, was informed by its broker that there was no coverage for flood damage, it filed suit asserting the brokers breached their duty by failing to investigate their client's insurance needs.

In April of 2003 the defendant brokerage won the first round when a trial court granted a motion for a summary judgment and tossed out the case

Saturn appealed on the case's merits but Tuesday the Superior Court in Harrisburg ruled that a broker has no such duty to inspect a property before obtaining coverage for a client.

Robert Hurns, counsel for the Property Casualty Insurers Association of America, said he agreed that imposing such a burden on brokers would be onerous.

“The court clearly stated that the initial element in any negligence action is that the defendant owes a duty of care to the plaintiff,” Mr. Hurns said. “The court determined a legal duty did not exist.”

Special Reports /

No Broker Duty To Inspect For Flood Risk

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