PIANJ Hails Court Ruling on Agent E&O

The Professional Insurance Agents of New Jersey Inc. said a decision rendered last week by the Supreme Court of New Jersey in the case of President vs. Jenkins is a victory for all agents because it maintains the current standard of care agents and brokers owe to their clients.

PIANJ had filed an amicus curiae (friend of the court) brief in the case because the court could have raised the standard of care producers owe to their clients and could have required producers to become guarantors against coverage gaps.

“We are very pleased with the Supreme Court’s decision,” said PIANJ President Louis Beckerman. “Professional agents and brokers have the utmost duty to provide accurate and ethical service for their clients. However, policyholders hold an equally important responsibility to be truthful and forthcoming so that their producers can do their jobs.”

In the case, the policyholder, Dr. Jenkins, alleged his insurance agent, C&R Insurance Agency, breached its professional duty of care by failing to bridge a gap in his medical malpractice coverage. Jenkins told C&R he needed medical malpractice coverage effective Feb. 1, 1998, the date his existing policy was set to expire. In fact, Jenkins’ policy was canceled retroactively to October 26, 1997.

However, Jenkins never told C&R about the cancellation and stated in his Jan. 9, 1998, application that his previous policies had never been canceled. Jenkins was sued for acts of malpractice that occurred Jan. 3 and 4, 1998, dates for which he had no insurance coverage.

The Supreme Court agreed with C&R that the agency had not breached its duty of care and that this duty should not be expanded. The court held that based on Jenkins’ assertions, C&R justifiably believed that there was no need for coverage prior to Feb. 1, 1998, and C&R’s actions were consistent with customary industry practice.