If you are a victim of a fire and either lost your home or suffered other property damage, then you likely have questions about who is responsible for such costs. One potential source is an insurer. If you have a fire insurance policy, then it is possible that the loss will be covered and paid for by the insurance company. However, if you do not have insurance or your insurance company refuses to pay for any or all of your losses, then your insurance broker or agent might be responsible.
This article will focus on insurance agents and brokers, explain the difference between them, and the laws that govern them so that you can understand whether to seek compensation for your fire damage. Please be aware that while this article only addresses brokers and agents, your insurance company might still be responsible for some or all of your fire losses even if it has denied coverage. Please look at our other articles to get a better understanding of those issues.
What is the difference between an agent and a broker?
Before determining whether your insurance agent or broker might be responsible for your fire damage costs, it is important to understand the difference between the two. Even judges often fail to understand the difference between an insurance agent and an insurance broker and use the terms interchangeably when in fact they are very different positions with different duties.
The simplest way to understand the distinction between the two is that generally an agent represents insurers to sell you products, whereas you generally hire a broker to represent you when deciding between insurance policies. An agent works for the insurance company and the broker is supposed to work for you. Sometimes there are agents who work with multiple insurance companies or exclusively with one insurance company. While the exclusive or “captive” agents have fewer products to offer, they often have a better understanding of the products they sell than other agents or brokers. To understand if you worked with an agent or a broker to acquire insurance, you can look at how they advertise themselves either on their website or store front, or you can call the office and ask.
Is your insurance agent responsible for your fire damage?
To help understand an agent’s responsibility to you, it is easier to understand what duties they do not owe you. Since agents represent insurance companies and not you, an agent is generally not responsible if you cannot get payment for your loss as a result of a mistake that the agent made in performing his or her duties for the insurance company. Also, agents generally have no responsibility to provide you advice as to what the best coverage for you would be. Therefore, your insurance agent is generally not responsible for the loss of your house from the fire if you do not have fire insurance simply because the agent did not tell you to buy fire insurance or that such insurance was available — even if it would have been a good idea. The agent’s job is simply to sell an insurance product and not to recommend additional coverage.
However, there are circumstances when an insurance agent can be responsible for your fire damage and costs. The agent may be responsible if they lied to you about what kind of insurance you purchased. For example, if the agent told you that you have fire insurance but this was not true, then the agent can be responsible for your fire damage whether or not the agent deliberately failed to tell the truth. Your agent may also be responsible if you specifically asked for fire insurance and the agent failed to purchase it for you. Finally, your insurance agent may be responsible for your loss if he or she told you that they were a fire insurance specialist yet they still failed to get you a policy that fully covers all of your losses from the Northern California fires.
Is your insurance broker responsible for your fire damage?
The circumstances in which an insurance broker may be responsible for the damage caused by the Northern California fires is similar to those in which an agent can be responsible, but not completely identical. Your insurance broker may also be responsible for your lost home and property if they misrepresented your insurance coverage, whether by telling you that you would have fire coverage when you did not or whether they said you would have a certain amount of coverage but you did not. Your broker may also be responsible if you requested fire insurance coverage but the broker did not actually get it or if they got it but reduced the amount of coverage without getting your consent. Since your broker is supposed to be representing you and your interests, a broker may be responsible for misrepresented fire coverage even if you could have found out that there was no coverage for fire damage by reading the policy. A major difference between the responsibility between a broker and an agent is that a broker can be responsible for purchasing a fire insurance policy that is ambiguous and does not clearly provide coverage for your fire loss.
However, if your insurance will not provide you fire loss coverage because your policy was canceled before the fire, then your broker is likely not responsible even if they did not notify you of the canceled policy.
What can you do?
If you do not have insurance or if your insurance company refuses to pay for your home or other property costs that resulted from the Northern California fires, then contact our office to understand your options and to see if you still have a path to collect these costs from your insurance company, agent or broker. Contact the Law Offices of Scott Glovsky for a no-cost consultation.