Vicarious Liability of an Insurer for Insurance Representative Actions

Summary

This practice note addresses vicarious liability of an insurer for the actions or inactions of an insurance representative. Vicarious liability may attach by statute, by contract, or can arise through respondeat superior. Results may have different financial and regulatory impacts on the parties depending on the facts of the controversy, the status of the parties, their relationship to each other, and the law of the jurisdiction. Attorneys representing insurance companies and other risk-bearing entities, insurance representatives, and consumers of insurance must grasp the complicated ways vicarious liability may arise. Situations that involve the transaction of insurance, like the denomination of representatives as agents or brokers, their degree of autonomy, whether they are free to sell the products of multiple insurers, whether they advise the prospective insured on insurance needs, and whether they shop the market for the client, are all factors in vicarious liability.