Intermarket Insurance Agency, Inc. recently escaped liability to its insured on a policy placement, winning summary judgment on the two counts of the complaint directed to it. Intermarket placed a business personal property policy with Travelers on behalf of Artvale, a fabric and textile wholesaler. The policy excluded flood and sewage backup. And when Artvale moved its inventory to a warehouse in Passaic, New Jersey, Artvale asked Intermarket to amend the policy with Travelers to reflect the move, which Intermarket did. Artvale did not ask Intermarket to obtain flood coverage.

Hurricane Irene caused flooding at the warehouse on August 27, 2001, damaging Artvale’s inventory. Travelers denied the claim, relying on certain exclusions, including flood. Artvale sued Travelers, Intermarket, and the warehouse owner.  Artvale claimed that Intermarket was negligent in not obtaining flood coverage for Artvale, and breached its fiduciary duty to Artvale for the same reasons.

Justice Gerald Lebovits of the New York Supreme Court, New York County granted Intermarket’s motion for summary judgment as to both theories.[1] The Court found that Intermarket did not breach any duty to Artvale because it obtained the coverage requested, which did not include flood coverage, and because the undisputed facts did not support the argument that Intermarket had any additional duty of advisement to Artvale. The evidence of a long-standing business relationship was not sufficient to establish a duty of advisement.  The negligence cause of action was therefore dismissed. As to the cause of action for breach of fiduciary duty, the Court found that normally, an insurance agent does not owe a fiduciary duty to its insured, and the facts of this case did not establish that a fiduciary relationship existed. The breach of fiduciary duty cause of action was therefore dismissed.

[1] Rick Friedman Enters., Ltd. v. Travelers Indem. Co., 2017 NY Slip Op 30077(U) (New York Sup. Ct. January 9, 2017).