Most practitioners expect an insured to read their policy, but that does not relieve an insurance agent or broker from his or her duties. An insured’s failure to read the policy does not relieve the insurance agent/broker from liability for negligence according to a relatively narrow decision by the New York Court of Appeals. Insurance Journal has an excellent summary of this decision and prior history (see here, written by Steven Pitt of Kunz Plitt Hyland & Demlong, P.C.).
The Court held that the insured’s failure to read the policy, in a failure-to-procure-insurance case, at most, may give rise to a defense of comparative negligence but should not bar, altogether, an action brought against the broker.
Due to the narrow application, it is not likely that this decision will impact insurance agents E&O insurance underwriting or pricing.