On March 16, 2023, the First Department issued a decision in Florence Capital Advisors, LLC v. Thompson Flanagan & Co., LLC, 2023 NY Slip Op. 01358, holding that an insurance broker can be held liable for negligently failing to obtain coverage, explaining:
Supreme Court improperly dismissed plaintiffs’ causes of action for negligence against Thompson Flanagan and WIA, the brokers. Plaintiffs sufficiently pleaded a cause of action for negligence against the brokers which was distinct and not duplicative of their breach of contract claim. The law is reasonably settled that insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so. Thus, a party who has engaged a person to act as an insurance broker to procure adequate insurance is entitled to recover damages for breach of contract from the broker if the policy obtained does not cover a loss for which the broker contracted to provide insurance, and the insurance company refuses to cover the loss. Additionally, an insurance agent or broker can be held liable in negligence if he or she fails to exercise due care in an insurance brokerage transaction and thus, a plaintiff may seek to hold a defendant broker liable under a theory of either negligence or breach of contract. Here, in addition to alleging both brokers breached a contract to procure adequate insurance coverage, plaintiffs also assert that they failed to inform them of the definitions and terms of the policy. The latter allegations implicate a duty and potential breach by the brokers independent from the contract.
(Internal quotations and citations omitted).