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“I was only following orders.”  While a weak statement in most cases, this is often supported by the courts in insurance cases. The courts state the duty of the insurance broker is to do what the customer asks, nothing more.  In a recent case[1], a manufacturer (C.S. Osborne) had $1,000,000 in flood insurance.  Super Storm Sandy came, and the $1,000,000 was inadequate.

Osborne pursued a suit against their insurance broker – indicating that the broker should have provided quotes for higher limits, and the court concluded an insurance broker is “not an insurance consultant, and that if Osborne had wanted an insurance consultant, it could have retained one.”  Continuing on, the court said “[the broker’s] proposal clearly stated it would receive payment from the insurer [and] did nothing to suggest it worked for anyone else.”

Your broker may be special to you, a good friend and skilled at finding you coverage, but, if the coverage isn’t there, it’s likely you will hear about the “order taker defense.”  Separating advice (and management) from sales can prevent this.

[1]  C.S. Osborne & Co., Inc. v. Charter Oak Fire Ins. Co., No. A-2182-15T4 (N.J. App.Div. May 1, 2017)

Abby Krueger,



May 23, 2017

Licata Risk & Insurance Advisors, Inc.
137 South Street, Second Floor
Boston, MA 02111-2848
617-451-2140     advice@licatarisk
LicataRisk Advisors is an independent risk management and insurance consulting firm. We are not brokers and we do not sell insurance. We are not connected to any insurance company or product in any way and do not receive commissions. This is an important difference as you will have an expert on your side who is only committed to you.