Florida Insurance Agency Law: Beware the “Independent” Agent
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Insurance JUNE 2008 Florida Insurance Agency Law: Beware the “Independent”Agent By Gary Guzzi, Esq., [email protected] knew that the insured’s household included salesperson, who sells for only one carrier, ne issue that commonly arises a teenage driver not listed in the automobile will generally be deemed to be a legal agent Oin insurance coverage matters, insurance application. The insured may claim of that insurer. See, e.g., Almerico, 716 So. and especially in rescission cases, that the salesperson had previously sold 2d at 776. Therefore, where the actions or is whether an insurance carrier to the insured a life insurance policy still knowledge of the salesperson in question will be bound by or liable for in existence, but not disclosed in the new are those of a captive agent, the carrier the knowledge or actions of the application. will generally be liable for such actions or individual who sold the insurance Under Florida law, where an insurer is knowledge and the agency analysis need policy. Traditionally, a carrier could aware of the true facts at the time it issues not proceed any further. An independent generally rely upon a salesperson’s status the policy, it is estopped from rescinding the insurance broker who is free to sell insurance as an independent agent/broker to prevent policy based on a claim that those facts were from several different insurers, however, the salesperson’s knowledge or actions from not disclosed during the application process. is usually deemed to be the legal agent of creating liability for the carrier. Case law in Almerico v. RLI Ins. Co., 716 So. 2d 774 (Fla. the insured. Id.; T&R Store, Fixtures, Inc. v. Florida, however, has created a good deal of 1998). Moreover, where the salesperson Travelers Ins. Co., 621 So. 2d 1388 (Fla. 3d uncertainty regarding this issue.1 is considered to be a legal agent of the DCA 1993); AMI Ins. Agency v. Elie, 394 In many rescission cases, an issue insurer and is acting within the scope of that So. 2d 1061, 1062 (Fla. 3d DCA 1981). In arises as to whether the salesperson was authority, the legal agent’s knowledge is the absence of special circumstances, the aware of the true facts concerning an imputed to the carrier. See, e.g., id.; Johnson broker will be considered the legal agent alleged misrepresentation. For instance, an v. Life Ins. Co. of Ga., 52 So. 2d 813 (Fla. Continued on page 2 insured may claim that although she did 1951); Wimberg v. Chandler, 986 F. Supp. not disclose the existence of a particular 1447, 1452 (M.D. Fla. 1997); Gonzalez v. INSIDE medical condition on the application, she Great Oaks Cas. Ins. Co., 574 So. 2d 1182 (Fla. 3d DCA 1991). Accordingly, should the 2008 Florida Legislative Session informed the salesperson of the condition. Ends with More Changes to the The insured may claim that the salesperson insured claim that the salesperson was aware Property and Casualty Insurance of the true facts, even though the written Statutes ........................................... 3 application contained a misrepresentation, The “Bring-Your-Guns-To-Work Please route this issue to: the critical issue then becomes whether the Law”: Right to Bear Arms Trumps Workplace Safety .......................... 5 salesperson is the legal agent of the insured, _______________ Texas Supreme Court Approves the carrier, or both. the Use of Insurance Defense Staff _______________ Florida law draws a distinction between Attorneys ........................................ 6 insurance salespersons who sell insurance Florida Court Finds That Insurer Did _______________ for only one insurer, as opposed to those NOT Act In Bad Faith ..................... 7 _______________ who sell for multiple carriers. A captive Florida Appellate Update ............. 8 1 Akerman Senterfitt Insurance Bulletin June 2008 Florida Insurance Agency Law party justifiably relied on that representation; Alden Life Ins. Co., 744 So. 2d 1123 (Fla. 4th Continued from page 1 and (3) the injured party changed position in DCA 1999), while other courts have been reliance upon the representation and suffered more willing to analyze other factors under the of the insured as to matters connected detriment. National Indem. Co. of the “totality of the circumstances” test to conclude with the application and the procurement South v. Consolidated Ins. Servs., 778 So. that there was no agency relationship, see of the insurance, despite the fact that the 2d 404, 407 (Fla. 4th DCA 2001). Apparent Cadet, 862 So. 2d at 74 (despite carrier broker receives a commission from the agency issues usually arise in the context of a furnishing salesperson with carrier’s materials insurer. Steele v. Jackson Nat’l Life Ins. salesperson who allegedly provides advice or and carrier’s acceptance of business from Co., 691 So. 2d 525 (Fla. 5th DCA 1997); guidance to the applicant/insured with respect salesperson, no statutory agency relationship Couch on Insurance (3d ed. 1995) § 45:4; to application-related issues. See Steele, 691 existed because language in application placed 16 Appleman, Insurance Law and Practice So. 2d at 528. applicant on notice to inquire as to limitations § 8730 (1981) (general rule is that notice Finally, statutory agency, pursuant to Fla. placed on salesperson’s authority). to or knowledge of broker as to facts or Stat. § 626.342, will be found where, under One court found that a salesman’s alleged matters pertaining to risk or coverage, while the totality of the circumstances, the insurer explanation to an applicant that the applicant imputable to insured, is not imputable to cloaks the salesperson with sufficient indicia need not disclose certain medical history 2 insurer). of agency to induce a reasonable person could not be imputed to the carrier because Nevertheless, even where the to conclude that there is an actual agency no apparent agency relationship existed due salesperson is an independent broker, relationship (such as where the insurer provides to language in the application that placed the agency analysis does not end there. the salesperson with literature, brochures, the applicant on notice to inquire as the Instead, a determination must be made blank forms, applications, binder forms, limitations on the salesman’s authority. See whether, despite the salesperson’s status stationery, business cards, letterheads, signs, Steele v. Jackson Nat’l Life Ins. Co., 691 So. as an independent broker, a legal agency corporate seals, receipts or other similar 2d 525 (Fla. 5th DCA 1997). However, in two relationship has been created either through documents and the carrier accepts business subsequent cases, a state court and a federal actual agency, apparent agency or statutory from the salesperson), unless the insured knew court reached different conclusions regarding agency. If any of these three bases of or was put on notice of inquiry regarding whether a paramedic examiner can be deemed agency are present, the salesperson will be limitations that may have been placed on to be the legal agent of the carrier based deemed to be the legal agent of the carrier and the broker’s actual authority. Almerico, upon the paramedic’s actions or information the salesperson’s actions or knowledge will 716 So. 2d at 783; Cadet, 862 So. 2d at provided to the paramedic during the exam. generally be imputed to the carrier. 741. Statutory agency issues typically arise Compare Casamassina v. The United States The elements necessary to establish where the salesperson’s agency agreement Life Ins. Co. in the City of New York, 958 So. an actual agency relationship are: (1) does not create an agency relationship and 2d 1093 (Fla. 4th DCA 2007) (holding, without acknowledgement by the principal that the the salesperson does not necessarily make explanation, that the paramedic examiner was agent will work for him; (2) acceptance by a specific representation to the applicant/ the legal agent of the carrier simply because the agent of the undertaking; and (3) control insured, but the documents, signs and other the examiner had assisted the applicant over the agent’s actions by the principal. See writings cause the applicant/insured to believe with completing a portion of the insurance Villazon v. Prudential Health Care Plan, Inc., that a legal agency relationship between the application) with Joseph v. Zurich Life Ins. Co. 843 So. 2d 842 (Fla. 2003); Banco Ficohsa v. salesperson and the carrier exists. Id. of Am., 159 Fed. Appx. 114 (11th Cir. 2005) Aseguradora Hondurena, 937 So. 2d 161 (Fla. In applying these standards to factual (alleged statement to paramedic examiner 3d DCA 2006). Typically, actual agency issues scenarios, courts across Florida have taken about medical history that was not disclosed are resolved through an analysis of the written different approaches. Some courts have in written application could not be imputed to agreement between the salesperson and the seemingly applied a “bright-line” test with carrier to avoid rescission of the policy). Simply carrier that outlines the authority granted to respect to statutory agency, see Straw v. put, current Florida law regarding insurance the salesperson to act on behalf of the carrier. Associated Doctors Health & Life, 728 So. agency has created uncertainty with respect See Amstar Ins. Co. v. Cadet, 862 So. 2d 736, 2d 354 (Fla. 5th DCA 1999) (mere fact that to whether a salesperson or other individual 741-42 (Fla. 5th DCA 2003). the insurer had provided the salesperson involved in the application process will be The elements necessary to