Insurance Agent Negligence

A sudden storm caused a sewer line to back up and flood the entire lower level of a suburban home, resulting in extensive water damage. The homeowner thought he was insured, but the carrier pointed to an exclusion in the policy for flood damage. The homeowner turned to Rutter & Russin for help, and the firm's work discovered that the agent had erroneously failed to secure the proper type of coverage. The agent's own insurance company stepped in to settle the case for a confidential amount.

The fire that severely damaged a pallet business was bad enough, but when the insured discovered that it was seriously underinsured, a bad situation turned into a disaster. The insured's long-time insurance agent had recommended a certain level of coverage, which the insured agreed to. Unbeknownst to the insured, however, the agent had performed a building evaluation that concluded the insured's building should actually be insured for a far greater amount. The agent, when confronted with the evidence during the course of the ensuing lawsuit, eventually admitted that he had made a mistake, but could offer no explanation for his action. His E&O insurer wisely settled the case before trial.

The insured called a new agent and answered several questions over the telephone. The agent then sent the application to the insured for signature. The insured signed, believing all of the answers were correct. However, the agent failed to disclose on the application that the insured's house was under construction and was unoccupied. The insurance company, assuming the house was occupied by the homeowner, issued a standard homeowners policy instead of a builder's risk policy. When a fire leveled the house, the insurer denied the claim based on a perceived application misrepresentation. Rutter & Russin sued both the agent and the insurer, and established during the course of discovery that both defendants were at fault. The case finally settled shortly before trial after two mediations.