Thomas M. Bona, P.C.

Attorneys At Law

Rough Ride:

Rodeo Accident Gives Rise To Insurance Malpractice Claim


As part of our continuing commitment to provide outstanding representation and to serve as an information resource, we wish to inform you of a recent case concerning insurance malpractice.


One of the areas in New York Law that is still evolving are malpractice claims against insurance brokers and agents. In the past, the law held that there could be no claim for malpractice against an insurance agency for failing to procure requested coverage by an insured. Most of these cases were dismissed because the Courts held that it was the insured’s obligation to examine the policy to ensure that the coverage that they requested was provided.


In 2012 the Court of Appeals found that an insurance agent could be held liable for negligence or breach of contract when it could be established that the client made a specific request for coverage which was not provided in the policy.  A breach of this duty gives rise to liability if it is shown to be the proximate cause of the client’s loss. Although it can be difficult to establish that a specific request for coverage was requested, a recent case showed that this can indeed occur.


In Finch v. Steve Cardell Agency, the plaintiff put on rodeos. Starting in 2006 the plaintiff obtained a range of insurance policies through the defendant Steve Cardell Agency (“Agency”), purchasing liability insurance before each show. The Agency obtained coverage and provided the certificate to plaintiff. In August 2012, the plaintiff contacted defendant for coverage for an upcoming Pennsylvania rodeo. The carrier for the past rodeos declined coverage apparently because of its location. The Agency office assistant found another carrier that she believed would provide the same coverage. Plaintiff took the coverage with Atlantic Casualty Insurance and went ahead with the rodeo. When the event was over, the bulls were supposed to be loaded onto the plaintiff’s trailer. Four bulls escaped from the holding pen and were captured, but not before injuring bystanders who sued the plaintiff.


Plaintiff contacted the Agency and the Agency president discovered that the policy had a coverage exclusion for injuries and damages caused by animals. Atlantic Casualty Insurance Company cited the exclusion in refusing coverage as well as an auto exclusion for activities such as loading and unloading operations. The plaintiff filed an insurance malpractice suit against the Agency for negligently procuring a policy that excluded coverage for animals and damage caused by animals. The plaintiff and the Agency moved for summary judgment. The Supreme Court granted the Agency’s summary judgment motion finding that animal exclusion was not the proximate of plaintiff’s loss. The Court noted that the plaintiff’s claims would have been denied because of the auto exclusion as well. The Appellate Division Third Department reversed.


The Appellate Division found that although an insurance agents common law duty does not include a continuing duty to advise clients of appropriate coverage or recommend additional coverage that the clients did not request, an agent may be liable for failing to provide appropriate advise or recommend coverage where there is a special relationship.   The Court noted that a special relationship can arise when there is a course of dealing over an extended period of time which would have put an objectively reasonable insurance agent on notice that their advice was being sought and specifically relied on.


The Appellate Division noted that whether a special relationship exists is a factual determination that is governed by the particular relationship and the facts on a case by case basis. The Court noted that the defendant had been providing the plaintiff with various insurance since 2006 and liability insurance for plaintiff’s rodeo operations for several years before the accident in 2012. The president of the defendant Agency acknowledged that the animal exclusion was an error, stating that his assistant had overlooked the exclusion and that it was not discovered until after the accident. The Third Department noted that the employee was fired for issuing a policy with the animal exclusion.


The Court further found that the record failed to establish as a matter of law that Atlantic Casualty would necessarily be able to demonstrate that the injury fell within the scope of the auto exclusion. The Appellate Division found that the evidence raised triable issues of fact as to whether the plaintiff and the defendant had a special relationship and if so, whether defendant proximately caused plaintiff’s loss by negligently failing to advise and guide him in obtaining insurance coverage for all aspects of his rodeo including trailers.


Although demonstrating that there is a special relationship between an agency and an insured is difficult, this case shows that it can indeed be done. In addition, in order to protect oneself, an insured should always read the policy to determine if the coverage that they requested has been provided.


Should you have any questions, please call.

Thomas M. Bona