The paramount duty of an insurance producer is to follow the instructions of the client and this mandate is closely followed by the duty to procure insurance. The text “The Legal Environment of Insurance, Vol. 2” advises that the “producer's duty to procure insurance is similar to the duty to follow instructions.“

The insured has an obligation to give clear instructions as to the risks he or she wishes to transfer to an insurer, albeit in lay language. If the customer provides ambiguous instructions, a producer can be justified in acting on a reasonable interpretation of the client's instructions. Because of this stricture, it is very important to review an application for insurance with the client on a line-by-line basis.

I am currently participating in litigation involving a directors & officers (D&O) insurance policy issued to a charitable organization. The organization maintained coverage for three years. However, at the fourth renewal, it chose a producer who represented an insurer specializing in D&O coverage for charitable organizations.