Agent Not Responsible for Insured’s Stupidity

Cancellation and Lack of Coverage for Long Term Damage Defeats Suit Against Insured

When an insured’s vacation home was discovered to have two floors of the home flooded, the wood had peaked, mold had grown two or three feet off the floor, sheetrock was falling down, and the floors were swollen, his claim for damage was rejected because the policy had been cancelled before the loss and, even if it the policy was in effect, the loss was not covered.

In Randy Richardson And Leslie Richardson v. Wells Fargo Insurance Services USA, Inc., United States District Court Western District Of Washington At Seattle, C16-1228 TSZ, (July 26, 2017) defendant Wells Fargo Insurance Services USA, Inc.’s (“WFIS”) moved for Summary Judgment.


Plaintiffs utilized the brokerage services of WFIS from April 2012 through June 16, 2016. During that period, WFIS procured approximately eleven insurance policies for plaintiffs which covered multiple residential properties and personal vehicles, a boat, and a recreational vehicle, including eight policies with Allied Insurance Company (“Allied”). In December of 2014, an issue arose with the renewal of a policy on plaintiffs’ primary residence in Woodinville, Washington.

Taw Jackson, an account representative working in WFIS’s Seattle office was contacted by the Randy Jackson who ultimately resolved the renewal issue with Allied and the renewal policy on the plaintiffs’ primary residence was issued.

On March 13, 2015, Allied sent a Notice of Cancellation for Non-Payment of Premium (the “Notice”) to plaintiffs’ PO Box in Woodinville, Washington. The Notice indicated that unless payment was received on or before March 29, 2015, plaintiffs’ insurance policies with Allied would be cancelled.  Plaintiffs did not make payment, and thereafter Allied cancelled the eight policies listed in the Notice. The policy at issue covered plaintiffs’ vacation home in Manson, Washington (the “Manson Property”) and was one of the policies cancelled in March of 2015. There is no evidence that WFIS received a copy of the Notice or was otherwise informed of the pending cancellation.

Over the next fifteen months, Mr. Richardson had several communications with Mr. Jackson regarding the Allied policies.

In January of 2016, believing that he had misplaced his insurance card for his Mercedes, plaintiff requested a replacement card from Mr. Jackson. Although the policy covering the Mercedes was among those cancelled in March of 2015, Mr. Jackson erroneously issued an auto insurance card reflecting that the vehicle was covered through November 5, 2016.

In May of 2016, plaintiffs discovered a significant water leak at the Manson Property which flooded both floors, causing extensive damage. Based on information Mr. Richardson received from the local water company and Servpro, the company who provided mitigation services for the Manson Property, water had been leaking from the freezer.  Plaintiffs had not visited the Manson Property during that time period because it was primarily a summer vacation house.

Mr. Richardson contacted Allied, who informed him that Allied had no record of an insurance policy covering the property.  When Mr. Richardson reached Mr. Jackson after the holiday weekend, he informed Mr. Jackson of the water damage and his discussion with Allied. Mr. Jackson assured Mr. Richardson that the Manson property was “insured” and agreed to look into the matter on Mr. Richardson’s behalf.  Over the course of two weeks, Mr. Jackson learned, apparently for the first time, that plaintiffs’ policies with Allied had been cancelled in March of 2015.

Plaintiffs sued WFIC in King County Superior Court, seeking to recover the costs incurred as a result of the uninsured damage to the Manson Property. Thereafter, WFIS removed the action to the Western District of Washington. Plaintiffs allege that as a result of WFIS’s conduct, the water damage to the Manson Property was uninsured. Plaintiffs’ sued alleging four theories of recovery: (1) breach of contract, (2) negligence; (3) gross negligence, and (4) negligent misrepresentation.


When a broker’s negligence leads to inadequate coverage, he or she is liable for money damages to the insured for the resulting loss. To recover against an insurance broker for negligence, the insured must prove: (1) that the agent had a duty of care to protect the insured against a certain risk; (2) a breach of that duty; and (3) that the breach was the proximate cause; (4) of the insured’s damages.

Plaintiffs’ allegation that WFIS was negligent in procuring the insurance coverage for the Manson Property fails as a matter of law—plaintiffs cannot show that defendant’s alleged breach was the proximate cause of the lack of insurance coverage for the water damage to the Manson Property.

To establish proximate cause, plaintiffs must prove that the damage would have been covered “by the policy that would have been in effect except for the negligence of the broker.” Pacific Dredging Co. v. Hurley, 65 Wn.2d 394, 401 (1964). This requires plaintiffs to establish that “the loss would have been within the risks insured against in the policy” if the “insurance broker had obtained the insurance requested” by the insureds.

Plaintiffs failed to produce any evidence that policies were available at the time the policy on the Manson Property was procured (or at any time thereafter) or that such policies would have covered the water damage claim had they been procured.

Plaintiffs’ additional allegation that WFIS was negligent in failing to advise them that the Manson property was uninsured also fails as a matter of law. Ordinarily, an insurance agent does not have a duty to advise the insureds as to the adequacy of their insurance coverage. Instead, an insurance broker ordinarily assumes only those duties normally found in any agency relationship, which, in this context, includes primarily the obligation to exercise good faith in carrying out the client’s instructions with respect to procuring the requested insurance policy. Mr. Richardson concedes that WFIS “always procured the insurance [he] requested.”

Even if WFIS had assumed a duty to inform plaintiffs that the Manson Property was uninsured, however, plaintiffs cannot establish that WFIS’s breach of that duty proximately caused the lack of coverage for the water damage. However, the policy covering the Manson Property contains an exclusion which, in pertinent part, excludes loss caused by “[c]onstant or repeated seepage or leakage of water or steam over a period of weeks, months, or years from within . . . [a] plumbing, heating, air conditioning, or automatic fire protective sprinkler system; or a household appliance on the ‘residence premises’ . . . .

Mr. Richardson testified that two floors of the home were flooded, the wood had peaked, mold had grown two or three feet off the floor, sheetrock was falling down, and the floors were swollen. This undisputed evidence demonstrates that the water damage was caused by “[c]onstant leakage” that occurred over a period of weeks or months and thus, that the damage would not have been covered under the plain language of the exclusion even if the policy had been renewed.

Plaintiffs cannot show that damages resulted from any alleged breach because, as discussed above, the policy that covered the Manson Property would not have insured against the loss even if it had been in effect.

Accordingly, plaintiffs failed to establish a prima facie case for breach of contract and WFIS is entitled to judgment as a matter of law.


For the foregoing reasons, defendant’s Motion for Summary Judgment, was granted, and plaintiffs’ complaint was dismissed with prejudice.


Insurance agents are not required to be a mother to those for whom they transact insurance. They are only required to fulfill the orders placed and obtain the insurance requested. In this case the plaintiff was advised the policy on his vacation home was cancelled for non-payment of premium. He ignored it. The home was seriously damaged after the cancellation. When he learned their was no coverage he sued the agent to recover for his own negligence in allowing the policy to be cancelled and, even if it was not, the loss would not be covered. A waste of the court and agent’s time and money in defending the suit.


ZALMA-INS-CONSULT © 2017 – Barry Zalma

This article and all of the blog posts on this site digests and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business. Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

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An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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