An insurance broker is a person who transacts insurance with,but not on behalf of, an insurer. An insurance agent transactsinsurance with and on behalf of the insurer. In Pagel v. Ugly Monkey LLC, 49A02-1211-CT-903(Ind. App. 09/10/2013), the Indiana Court of Appeals was asked toresolve a dispute between Century Surety Co. and its insured. Thetrial court had determined at summary judgment that insurancebroker Dale Ueber, a/k/a Dale Uebersetzig, acted as the agent ofCentury when accepting notice of an occurrence and lawsuit from aninsured, Camburad LLC, and that Century had a duty to defendCamburad and the nightclub Camburad operated.

Amber Pagel broke her ankle at an Indianapolis nightclub, TheUgly Monkey, on July 6, 2007. Doug Campbell, the registered agentfor Camburad, was notified of the incident and promptly notifiedUeber in Greenwood, Ind.

Campbell states he notified Century of the Pagel claim bymailing an ACORD form. He retained no documentary evidence of thenotice and conducted no follow-up; Century denied receiving thenotice.

On April 8, 2008, Pagel filed a negligence claim against TheUgly Monkey. Campbell notified Ueber of the lawsuit. No answer wasfiled in response to the complaint and Pagel eventually was granteda default judgment in the amount of $334,310.26 against The UglyMonkey.

A litigant in a separate lawsuit also obtained a defaultjudgment against The Ugly Monkey and subsequently initiatedattempts to seize nightclub assets. Those proceedings, with theservice of the Pagel default judgment, caused Campbell toinvestigate why no defense had been undertaken on Camburad'sbehalf.

Ueber contacted a Century representative, but ultimately Centurydenied the Pagel claim for alleged failure to satisfy the conditionprecedent of timely notice.

The controversy between the parties is a question of agency:whether Campbell's notice to Ueber constituted effective notice toCentury.

An insurer's duty to defend does not arise until the insurerreceives the foundational information designated in its insurancepolicy's notice requirements. The function of a notice requirementis to supply basic information to permit an insurer to defendagainst a claim. An insurer cannot defend a claim of which it hasno knowledge and thus, until an insurer receives such enablinginformation, it cannot be held ­accountable for breaching the dutyto defend its insured.

Pursuant to the policy, Camburad was required to give Centurynotice of an occurrence or offense which might result in a claim assoon as practicable and also give like notice of a lawsuit.Campbell, on behalf of Camburad, gave notice of the Pagel claim andlawsuit to Ueber. Ueber has contended that he gave notice of theinitial claim to Century upon receipt of correspondence fromPagel's attorney; he has not made a similar claim with respect totimely notice of the lawsuit. Rather, Ueber explained that heplaced subsequent communications in his office file, believing thathe was "being carboned." Century did not receive actualcontemporaneous notice of the lawsuit and has denied that timelynotice was provided of the occurrence.

Related: Read "Broker'sFailure to Cover Amusement Devices for Cleveland Indians YieldsWrongful Death Suit"

Camburad can only be entitled to summaryjudgment if the designated materials establish, as a matter of law,that Ueber accepted notice of the Pagel claim and lawsuit as anagent of Century.

An insurance agent or broker who undertakes to procure insurancefor another is generally regarded as an agent of the proposedinsured. However, when the broker makes an application forinsurance and the insurance policy is issued, the broker is theagent of the insurer and can bind it within the scope of hisauthority.

Acts of an insurance agent—unlike acts of an insurancebroker—are imputable to the insurer. Acts of an insurancebroker—unlike acts of an insurance agent—are imputable to theinsured.

A person may be an agent as well as a broker, and may atdifferent times act in different capacities, sometimes representingthe insurance applicant and at other times acting on behalf of theinsurance company. Whether an insurance salesman is an agent of theinsurance company is fact sensitive and requires a consideration ofmany factors, including the relation of the parties, their actions,usual course of dealing, any instructions given to the person bythe company, the conduct of the parties generally, and the natureof the transaction.

The following facts were undisputed:

• Ueber customarily procured personal insurance policies throughseveral companies but did not typically procure commercialinsurance policies.
• Ueber obtained the commercial liability policy through theintermediary agency Specialty Brokerage Services.
• Ueber had no direct contractual relationship with Century. Hedid not issue any check to Century. Premium financing for thepolicy was arranged through Specialty Brokerage Services.
• Ueber was not aware of Century's procedures with respect torequisite notice.

The evidence of the relationship, conduct and course of dealingdemonstrate that Ueber was not an actual agent of Century, andCentury, as opposed to Camburad and The Ugly Monkey, was entitledto summary judgment on the claim of breach of a duty to defendbecause it never received notice of the suit.

A licensed insurance agent and broker does not have an agencyrelationship with the insurer as its agent. The insurer cannot bebound by the actions or failure to act of the broker. The brokerwho accepts a notice of loss from a client must immediately forwardthat notice to the insurer or advise the insured of its obligationto report the loss directly to the insurer. The broker'sresponsibility is to the insured and, as is made clear by thiscase, failing to fulfill that duty can exonerate the insurer andresult in a serious and expensive claim to the broker for inactionthat resulted in a six-figure default judgment.

Ueber's assumptions made an ugly monkey of himself and hisbusiness. He could not claim he saw nothing, heard nothing and,therefore, said nothing.

His error should be a warning to all insurance agents andbrokers who, faced with a loss notice on a policy obtained as abroker, and avoid the problem faced by Ueber by sending a copy ofthe ACORD notice of loss to the insured, the intermediarybrokerage, and the insurer with advice to the insured that allnotices should go to the insurer Century at the address stated onthe policy.

Related: Read " The Great Jewel Heist"