Skip to Main Content
Services Talent Knowledge
Site Search


Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

April 7, 2014

Insurance Broker's Liability Expanded by the New York State Court of Appeals

In a 4 to 3 decision, the New York State Court of Appeals reversed a summary judgment award to an insurance broker that dismissed the client's negligence cause of action, finding sufficient evidence of a special relationship to require a trial. See Voss v. Netherlands Ins. Co., 2014 N.Y. LEXIS 384, 1-15 (Feb. 25, 2014).

In 2004, the plaintiff obtained an insurance policy through the defendant broker that provided $75,000 in business interruption coverage. At the time the policy was obtained, the plaintiff questioned the broker as to whether the amount of business interruption coverage was sufficient and was allegedly told that the amount of coverage was adequate. According to the plaintiff, the broker told her that it would review her coverage annually as her businesses grew. Several years later, the plaintiff acquired a new building and added two new businesses to the location, while maintaining the same coverage. The building sustained a roof leak and a partial collapse of the roof in 2007 that resulted in two claims for business interruption, for which the plaintiff was paid $3,197 and $30,000. The policy was renewed shortly after the second loss, and the broker recommended that the plaintiff reduce the business interruption coverage limits to $30,000, which she agreed to. In 2008 there was a third loss, another partial roof collapse, that resulted in a claim and the lawsuit.

The plaintiff alleged that a special relationship existed with the broker and that the broker had negligently secured inadequate levels of business interruption coverage. The broker moved for summary judgment, contending that there was no special relationship and that the plaintiff was fully aware of the coverage limits of $75,000 and $30,000. The trial court granted the motion and the Appellate Division affirmed.

The Court of Appeals noted the general rule that a broker has a common law duty to obtain requested coverage within a reasonable time or inform of its inability to do so, but no continuing duty to advise, guide or direct a client as to additional coverage, unless there is a special relationship. Citing to its opinion in Murphy v. Kuhn, 90 N.Y.2d 266 (1997), the Court stated that a special relationship may be created in three exceptional situations: (1) where the agent receives compensation for consultation apart from premiums; (2) some interaction exists over a coverage question with the insured relying on the broker's expertise; or (3) 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 relied upon. It was the second situation that the Court addressed in Voss.

The Court concluded that the broker did not sustain its burden of proof to demonstrate there was no genuine issue of material fact as to whether a special relationship existed. The Court pointed to the interaction between the plaintiff and the broker at the beginning of the relationship when the broker allegedly stated that it would review the coverage annually and recommend adjustments as plaintiff's businesses grew. The Court found that plaintiff's awareness of the coverage limits did not defeat her claims as a matter of law. According to the Court, plaintiff's knowledge of the limits was irrelevant where her claim against the broker was for negligently failing to recommend higher limits.

Judge Smith, writing for the dissent, noted there was no authority for finding a special relationship based upon a gratuitous promise to consult, where no consultation takes place. The dissent cautioned that the majority's departure from precedent and the narrow view of an insurance agent's duty will likely result in agents becoming back-up insurers, "a result neither sensible nor fair".

The Court of Appeals did not change the general rule or the three types of situations giving rise to a special relationship. However, the Voss opinion suggests that a plaintiff can show the existence of a special relationship in the second situation by claiming reliance upon an oral promise by the broker or agent to review its coverage annually and to make recommendations. Attorneys representing insurance brokers and agents, as well as insurers providing errors and omissions coverage to them, should take note that the Voss opinion will result in increased exposure to these types of claims. It underscores the need for brokers and agents to follow best practices and to document interactions with their clients.

If you require further information regarding the content of this alert, please contact David B. Cabaniss, Chair of our Professional Liability Practice Area, at (518) 429-4279 or


Click here to sign up for alerts, blog posts, and firm news.

Featured Media


The New York FY 2025 Budget – CDPAP FIs Under Threat


Website Accessibility Lawsuits: Several "Tester" Plaintiffs—Anderson, Beauchamp, Murray, Angeles, Monegro, and Bullock—Targeting Businesses in Recent Flurry of Lawsuits


Updated Bulletin on Tracking Technologies in the Health Care Industry


NYS Board of Regents Adopts Regulations on the Mental Health Diagnostic Privilege


First Department Clarifies Pleading Requirements Under NYS Child Victims Act


Beneficial Ownership Reporting Requirements Under the CTA: Quarterly Reminder

We're Growing in DC!

We’re excited to announce Barclay Damon’s combination with Washington DC–based Shapiro, Lifschitz & Schram. SLS’s 10 lawyers, three paralegals, and four administrative staff will join Barclay Damon while maintaining their current office in DC’s central business district. Our clients will benefit from SLS’s corporate, real estate, finance, and construction litigation experience and national energy-industry profile, and their clients from our full range of services.

Read More

This site uses cookies to give you the best experience possible on our site and in some cases direct advertisements to you based upon your use of our site.

By clicking [I agree], you are agreeing to our use of cookies. For information on what cookies we use and how to manage our use of cookies, please visit our Privacy Statement.

I AgreeOpt-Out