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President v. Jenkins2/6/2003
. v. EMAR Group, Inc., 135 N.J. 182 (1994), the Supreme Court articulated that duty as follows: One who holds himself out to the public as an insurance broker is required to have the degree of skill and knowledge requisite to the calling. When engaged by a member of the public to obtain insurance, the law holds him to the exercise of good faith and reasonable skill, care and diligence in the execution of the commission . . . . If he neglects to procure the insurance or if the policy is void or materially deficient or does not provide the coverage he undertook to supply because of his failure to exercise the requisite skill or diligence, he becomes liable to his principal for the loss sustained thereby.
[Id. at 189, citing Rider v. Lynch, 42 N.J. 465, 476 (1964) (emphasis added).]
Thus, liability for breach of that duty can occur (1) if the broker "neglects to procure the insurance," (2) "if the policy is void," (3) if the policy is "materially deficient," or (4) the policy "does not provide the coverage he undertook to supply." Rider v. Lynch, supra, 42 N.J. at 476. See also Cox v. Santuro, 98 N.J. Super. 360, 365 (App. Div. 1967). Although these standards applicable to a broker are "minimums," Bates v. Gambino, 72 N.J. 219, 225-26 (1977); Dimarino v. Wishkin, 195 N.J. Super. 390, 393-94 (App. Div. 1994), proof of something more than the mere existence of a broker-customer relationship is required to trigger the broker's legal duty. Avery, supra, 242 N.J. Super. at 300. For instance, in Dimarino, supra, we upheld a finding of liability against a broker who failed to secure coverage for a client after the client expressly advised him that his previous policy had been canceled. By the same token, absent notice or a specific initiating inquiry from the client, it has been held that an insurance broker has no affirmative duty to advise an insured of gaps in his insurance coverage. Hartford Fire Ins. Co. v. N.W. Metal Fabricators, Inc., 793 F. Supp. 954, 957 (D.Or. 1992). Cf. Avery, supra, 242 N.J. Super. at 300-02. The key in determining a broker's liability is whether the broker's conduct invited reliance, or the client's conduct exhibited or justified a claim of reliance. Avery, supra, 242 N.J. Super. at 302. See also Dancy v. Popp, 232 N.J. Super. 1, 4-5 (App. Div. 1988), aff'd, 114 N.J. 570 (1989); Cox v. Santoro, supra, 98 N.J. Super. at 365-66.
The motion judge in this case found no liability as a matter of law:
It seems more than reasonable that an -- that a broker and insurer rely on the customer's assertion that its professional malpractice insurance would expire on 2/98; and, therefore, [C&R; could not be negligent.
In applying these general principles here, we are constrained to consider and weigh the facts most favorably in support of the movant Jenkins' contentions, which were rejected on the basis of C&R;s motion for summary judgment. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Viewed from that perspective, we conclude that reasonable minds could not differ that there was no breach of any legal duty owed by C&R;to Jenkins and therefore summary judgment in favor of C&R;was properly granted.
Here, there was no evidence that C&R;misled Jenkins, incorrectly explained the policy, knew the insured misunderstood the coverage requested and provided, or failed to procure insurance in accordance with the client's needs after being informed about them. In other words, there was no evidence from which a jury could reasonably conclude that the gap in Jenkins' insurance coverage for claims arising from the 22 events of January 3 and 4, 1998 was attributable to C&R;s failure to exercise the requisite s
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