When your corporation or home burns down and you discover out, too late, that your property insurance coverage coverage was not renewed, you don’t simply lose your corporation or dwelling. You lose religion within the system that was supposed to guard it. That’s what occurred to Lee and Keleen Deer, who believed they had been insured when a fireplace destroyed their Connecticut dwelling. Their dealer, Kevin Trahan, had obtained discover from the insurer that repairs had been required to take care of protection, however by no means handed it alongside or had a dialogue with them concerning the renewal.
The Deers argued that after practically twenty years of working with their insurance coverage agent, they’d a “particular relationship” that imposed an obligation on him to warn them that their coverage wouldn’t renew. The Connecticut Supreme Court docket, nonetheless, didn’t see it that manner. In Deer v. Nationwide Normal Insurance coverage Firm, 1 the courtroom not too long ago reaffirmed a strict, conventional rule that when a dealer procures the coverage, his authorized obligation ends until there may be clear proof of an ongoing settlement to take care of or renew protection or a particular relationship between the events that might assist such an obligation.
I’ve written about this situation earlier than in Insurance coverage Agent Duties Rely on Particular Relationships, and Insurance coverage Agent Negligence Instances Are Not often Straightforward to Show. The stress between these circumstances, which frequently view insurance coverage brokers as mere “order takers” versus “professionals,” and the realities of how policyholders depend on their brokers, has by no means been extra obvious.
What Occurred
The Deers had an extended historical past with their agent, Trahan, who for years positioned their owners protection with Allstate. When Allstate exited Connecticut’s owners market, Trahan positioned their new coverage with Century-Nationwide. Quickly after, the insurer’s inspector discovered lacking siding and warned, by way of an e-mail to Trahan, that repairs had been required “as a situation of continued protection.”
Trahan by no means handed that data alongside. Months later, the insurer despatched an authorized letter of nonrenewal to the Deers’ dwelling, however it went unclaimed. The coverage lapsed, the home burned down, and the insurer denied protection.
The Deers sued, arguing their agent had an obligation to warn them of the pending nonrenewal due to their lengthy and trusting relationship.
The Court docket’s Majority: No Particular Relationship, No Obligation
The Connecticut Supreme Court docket dominated 4 to 2 towards the Deers. Writing for almost all, Justice D’Auria reiterated that beneath long-standing Connecticut regulation, a dealer’s company relationship ends as soon as the coverage is procured. Except the dealer expressly agrees to deal with renewals or offers assurances of constant protection, there isn’t a authorized obligation to inform shoppers about nonrenewal.
The courtroom emphasised that the insurer, not the dealer, has the statutory obligation to ship non-renewal notices. Considerably, it discovered {that a} lengthy relationship or “behavior of dealing” by itself doesn’t create a particular obligation. There was additionally no proof of communication between the Deers and Trahan throughout the coverage 12 months.
In brief, the courtroom utilized the normal “no persevering with obligation” rule no matter how unfair that final result may really feel to the policyholder.
The bulk even acknowledged its sympathy for the Deers’ loss however concluded that the regulation should “draw a line” on legal responsibility. Because the opinion put it, “Each damage has rippling penalties. The issue for the regulation is to restrict the authorized penalties of wrongs to a controllable diploma.”
The Dissent: Time to Modernize the Regulation
Justice McDonald, joined by Justice Ecker, noticed it in a different way and forcefully. The dissent acknowledged that the rule the bulk clings to is greater than a century outdated, relationship again to Cheshire Brass Co. v. Wilson in 1913. 2 McDonald argued that in at present’s world, the place policyholders rely upon brokers as professionals fairly than mere salespeople, an agent’s obligation mustn’t finish the second a coverage is issued.
He wrote that Trahan’s data of the inspection outcomes and pending nonrenewal created an obligation to speak that data to his shoppers. The dissent criticized the bulk’s bright-line cutoff as “antiquated” and “out of step with fashionable insurance coverage apply.” Quoting Justice Oliver Wendell Holmes’ well-known line from The Path of the Regulation, McDonald reminded the courtroom: “It’s revolting to haven’t any higher purpose for a rule of regulation than that so it was laid down centuries in the past.”
McDonald urged the courtroom to acknowledge that insurance coverage brokers at present operate as trusted advisors, licensed and controlled professionals whose obligation of cheap care ought to embrace warning shoppers when protection is in jeopardy.
The “Particular Relationship” Normal Revisited
The Deers’ case highlights a essential level I’ve made earlier than. The regulation acknowledges exceptions the place an insurance coverage agent’s obligation extends past merely putting protection when a “particular relationship” exists.
In my earlier put up, Insurance coverage Agent Duties Rely on Particular Relationships, I defined that courts search for elements resembling an extended course of dealing involving recommendation and reliance, the agent’s data of the shopper’s protection wants, a historical past of dealing with renewals or managing dangers, and particular assurances that the agent will preserve protection.
The tragedy in Deer lies in how carefully it suits the spirit of these exceptions, even when not the letter. The dealer had many years of belief with the Deers, precise discover from the insurer that protection was in danger, and but remained silent. That silence price the Deers their dwelling.
Why This Case Issues
The Deer resolution reaffirms a strict boundary round agent legal responsibility in Connecticut. Except a dealer affirmatively undertakes to take care of or renew protection, there isn’t a obligation to warn about nonrenewal.
However the dissent factors to a rising shift in nationwide regulation and public expectation. Different jurisdictions more and more acknowledge that fashionable insurance coverage brokers are usually not mere intermediaries however professionals whose position contains safeguarding shoppers from foreseeable lapses in protection.
If the regulation doesn’t evolve to replicate that actuality, policyholders will proceed to fall into the hole between business apply and authorized doctrine. As Justice McDonald put it, “the regulation should adapt to the situations and desires of adjusting occasions.”
Ultimate Ideas
This case is a reminder for policyholders and insurance coverage professionals alike. For policyholders, by no means assume your protection will robotically renew. For brokers and brokers, perceive that your shoppers belief you not simply to promote insurance policies, however to guard them from the very dangers insurance coverage is supposed to cowl, together with the danger of being uninsured.
The Connecticut Supreme Court docket might have upheld the outdated rule, however the dissent presents a glimpse of the place the regulation must be heading.
For my part, the Deer case requires reflection on either side of the desk. Insurance coverage is a promise, a societal dedication to guard folks in occasions of loss. When that promise is damaged not by fraud, however by silence, the regulation mustn’t look away.
I additionally wish to give a shout-out to Harry Johnson of Johnson & Johnson, wholesale insurance coverage brokers, who introduced this essential case to my consideration. Harry and his nephew Fran had been a part of the AI Collective assembly with me and Keona Williams in Austin this week. It was refreshing and enlightening to satisfy such good {and professional} leaders, clearly passionate concerning the insurance coverage product and the insurance coverage business.
Thought For The Day
“The regulation have to be steady, but it can not stand nonetheless.”
— Roscoe Pound
1 Deer v. Nationwide Normal Ins. Co., 353 Conn. 262, 341 A.3d 936 (2025).
2 Cheshire Brass Co. v. Wilson, 86 A. 26, 86 Conn. 551 (Conn. 2013).
