When your enterprise or home burns down and you discover out, too late, that your property insurance coverage coverage was not renewed, you don’t simply lose your enterprise or residence. You lose religion within the system that was supposed to guard it. That’s what occurred to Lee and Keleen Deer, who believed they had been insured when a hearth destroyed their Connecticut residence. Their dealer, Kevin Trahan, had obtained discover from the insurer that repairs had been required to keep up protection, however by no means handed it alongside or had a dialogue with them concerning the renewal.
The Deers argued that after practically 20 years of working with their insurance coverage agent, that they had a “particular relationship” that imposed an obligation on him to warn them that their coverage wouldn’t renew. The Connecticut Supreme Court docket, nevertheless, didn’t see it that approach. In Deer v. Nationwide Normal Insurance coverage Firm, 1 the court docket just lately reaffirmed a strict, conventional rule that after a dealer procures the coverage, his authorized responsibility ends until there may be clear proof of an ongoing settlement to keep up or renew protection or a particular relationship between the events that might help such an obligation.
I’ve written about this challenge earlier than in Insurance coverage Agent Duties Depend upon Particular Relationships, and Insurance coverage Agent Negligence Circumstances Are Not often Simple to Show. The stress between these instances, which regularly view insurance coverage brokers as mere “order takers” versus “professionals,” and the realities of how policyholders depend on their brokers, has by no means been extra obvious.
What Occurred
The Deers had an extended historical past with their agent, Trahan, who for years positioned their owners protection with Allstate. When Allstate exited Connecticut’s owners market, Trahan positioned their new coverage with Century-Nationwide. Quickly after, the insurer’s inspector discovered lacking siding and warned, via an e-mail to Trahan, that repairs had been required “as a situation of continued protection.”
Trahan by no means handed that data alongside. Months later, the insurer despatched an authorized letter of nonrenewal to the Deers’ residence, nevertheless it went unclaimed. The coverage lapsed, the home burned down, and the insurer denied protection.
The Deers sued, arguing their agent had an obligation to warn them of the pending nonrenewal due to their lengthy and trusting relationship.
The Court docket’s Majority: No Particular Relationship, No Obligation
The Connecticut Supreme Court docket dominated 4 to 2 in opposition to the Deers. Writing for almost all, Justice D’Auria reiterated that beneath long-standing Connecticut regulation, a dealer’s company relationship ends as soon as the coverage is procured. Except the dealer expressly agrees to deal with renewals or offers assurances of continuous protection, there isn’t a authorized responsibility to inform shoppers about nonrenewal.
The court docket emphasised that the insurer, not the dealer, has the statutory responsibility to ship non-renewal notices. Considerably, it discovered {that a} lengthy relationship or “behavior of dealing” by itself doesn’t create a particular responsibility. There was additionally no proof of communication between the Deers and Trahan throughout the coverage 12 months.
In brief, the court docket utilized the normal “no persevering with responsibility” rule no matter how unfair that end result would possibly really feel to the policyholder.
The bulk even acknowledged its sympathy for the Deers’ loss however concluded that the regulation should “draw a line” on legal responsibility. Because the opinion put it, “Each harm has rippling penalties. The issue for the regulation is to restrict the authorized penalties of wrongs to a controllable diploma.”
The Dissent: Time to Modernize the Regulation
Justice McDonald, joined by Justice Ecker, noticed it in a different way and forcefully. The dissent acknowledged that the rule the bulk clings to is greater than a century outdated, courting again to Cheshire Brass Co. v. Wilson in 1913. 2 McDonald argued that in immediately’s world, the place policyholders rely upon brokers as professionals reasonably than mere salespeople, an agent’s responsibility shouldn’t finish the second a coverage is issued.
He wrote that Trahan’s data of the inspection outcomes and pending nonrenewal created an obligation to speak that data to his shoppers. The dissent criticized the bulk’s bright-line cutoff as “antiquated” and “out of step with trendy insurance coverage apply.” Quoting Justice Oliver Wendell Holmes’ well-known line from The Path of the Regulation, McDonald reminded the court docket: “It’s revolting to don’t have any higher cause for a rule of regulation than that so it was laid down centuries in the past.”
McDonald urged the court docket to acknowledge that insurance coverage brokers immediately operate as trusted advisors, licensed and controlled professionals whose responsibility of affordable care ought to embody warning shoppers when protection is in jeopardy.
The “Particular Relationship” Normal Revisited
The Deers’ case highlights a important level I’ve made earlier than. The regulation acknowledges exceptions the place an insurance coverage agent’s responsibility extends past merely inserting protection when a “particular relationship” exists.
In my earlier submit, Insurance coverage Agent Duties Depend upon Particular Relationships, I defined that courts search for components equivalent to an extended course of dealing involving recommendation and reliance, the agent’s data of the consumer’s protection wants, a historical past of dealing with renewals or managing dangers, and particular assurances that the agent will preserve protection.
The tragedy in Deer lies in how intently it matches the spirit of these exceptions, even when not the letter. The dealer had a long time of belief with the Deers, precise discover from the insurer that protection was in danger, and but remained silent. That silence value the Deers their residence.
Why This Case Issues
The Deer choice reaffirms a strict boundary round agent legal responsibility in Connecticut. Except a dealer affirmatively undertakes to keep up or renew protection, there isn’t a responsibility to warn about nonrenewal.
However the dissent factors to a rising shift in nationwide regulation and public expectation. Different jurisdictions more and more acknowledge that trendy insurance coverage brokers usually are not mere intermediaries however professionals whose position consists of safeguarding shoppers from foreseeable lapses in protection.
If the regulation doesn’t evolve to mirror that actuality, policyholders will proceed to fall into the hole between trade apply and authorized doctrine. As Justice McDonald put it, “the regulation should adapt to the circumstances and wishes of adjusting instances.”
Last Ideas
This case is a reminder for policyholders and insurance coverage professionals alike. For policyholders, by no means assume your protection will routinely renew. For brokers and brokers, perceive that your shoppers belief you not simply to promote insurance policies, however to guard them from the very dangers insurance coverage is supposed to cowl, together with the danger of being uninsured.
The Connecticut Supreme Court docket might have upheld the outdated rule, however the dissent affords a glimpse of the place the regulation needs to be heading.
For my part, the Deer case requires reflection on each side of the desk. Insurance coverage is a promise, a societal dedication to guard individuals in instances of loss. When that promise is damaged not by fraud, however by silence, the regulation shouldn’t look away.
I additionally need to give a shout-out to Harry Johnson of Johnson & Johnson, wholesale insurance coverage brokers, who introduced this essential case to my consideration. Harry and his nephew Fran had been a part of the AI Collective assembly with me and Keona Williams in Austin this week. It was refreshing and enlightening to satisfy such good {and professional} leaders, clearly passionate concerning the insurance coverage product and the insurance coverage trade.
Thought For The Day
“The regulation have to be steady, but it can’t stand nonetheless.”
— Roscoe Pound
1 Deer v. Nationwide Normal Ins. Co., 353 Conn. 262, 341 A.3d 936 (2025).
2 Cheshire Brass Co. v. Wilson, 86 A. 26, 86 Conn. 551 (Conn. 2013).
