Errors and omissions claims against insurance agents can take many different forms. In this column I previously have written about E&O claims resulting from an insurance broker's alleged failure to advise an insured, or her failure to recommend different types of coverage. I also have written about an insurance agent's liability for coverage placed with an insolvent carrier. This month I will address the E&O claim for misrepresentation of coverage.

Related: Read Matthew Marrone's May “Avoiding E&O” article: “Are you paying your employees what you owe them?”

Like a “failure to advise” claim, a misrepresentation claim is generally made against the broker when an insured experiences an uninsured loss for which he allegedly thought he did, or should have had, coverage. In most cases the two types of claims go hand in hand and complement each other. However, there are slight differences. In a “failure to advise” claim, the scope of the broker's duty will most likely be at issue: Is there a “special relationship” between the broker and insured that would impose a duty upon the broker to affirmatively recommend and explain coverages to the insured, or is the broker merely an order-taker? The claim's success is highly dependent upon the jurisdiction, as each state applies different legal standards.