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NH Supreme Court Holds Insurance Agent Liable Based On Minimal Proof Of Duty And Causation

A sharply divided New Hampshire Supreme Court affirmed a substantial verdict against an insurance agent for failing to recommend that a client purchase additional insurance coverage, even though the insured did not request such coverage and offered only minimal evidence to prove that it would have been available.

The insured in 101 Ocean Blvd., LLC v. Foy Insurance Group, Inc. (Appeal No. 2019-0067), had a long-standing relationship with the agency, which obtained numerous policies and fulfilled most of the company’s insurance needs. The insured purchased “replacement cost” coverage for an older commercial building, but the policy provided only minimal “ordinance and law” coverage, which would apply to the additional cost of bringing the building into compliance with current code requirements following a loss.

After a fire, the insured discovered that it would be prohibitively expensive to make the necessary upgrades for code compliance, and sued the agent for failing to recommend more coverage. The insured prevailed at trial, and the Supreme Court upheld the verdict, holding that the jury could properly have concluded that there was a “special relationship” between the parties, which obligated the agent to offer unsolicited advice about the adequacy of coverage. A majority of the Court went on to conclude that cursory and somewhat ambiguous testimony from the insured’s expert was sufficient to establish that additional ordinance and law coverage was commercially available as a general matter, and could have been purchased if the agent had attempted to do so. Two of the five justices dissented, maintaining that the insured should have been compelled to go further, and prove the availability and cost of additional coverage for the particular insured and the property at issue.

Click here to read the full decision.