Expert Testimony Needed to Prove Insurance Agent’s Duty of Care

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Summary Judgment for Agent Because Plaintiff Had No Expert Testimony Proving Breach of Fiduciary Duty

While Omar Alabassi, was covered by an insurance policy obtained through T.I.B. Insurance Brokers (“TIB”), he was involved in a hit-and-run collision with another driver who fled the scene. Alabassi brought a negligence claim against TIB, alleging that TIB failed to meet its standard of care in (1) providing him with adequate insurance coverage and (2) preparing and submitting his insurance application. The district court granted summary judgment in favor of TIB because Alabassi failed to present expert testimony establishing that TIB breached its duty of care. In Omar Alabassi v. T.I.B. Insurance Brokers, Inc., No. 19-1183, United States Court Of Appeals For The Tenth Circuit (September 17, 2020) the Tenth Circuit was asked to rule an expert was not necessary.

FACTS

At the time of the accident, Alabassi owned his own limousine service but was driving his personal vehicle to pick up a customer at Denver International Airport. Before the accident, TIB sold Alabassi a commercial auto insurance policy issued by Columbia Insurance that covered both Alabassi and his limousine company. TIB advised Alabassi about which insurance policy to purchase and then helped Alabassi to prepare and submit his insurance application.

The insurance application contained a Colorado Coverage Selection Form, which allows the insured to choose the amount of uninsured motorist coverage that will be covered by his policy.  Alabassi selected the minimum coverage required by Colorado law but he also checked a box for $50,000 single limit coverage. Alabassi asserts that these two options conflict with each other.

Following the accident, Alabassi claimed that he suffered over $86,000 in medical expenses but Columbia Insurance offered him only $55,000. Alabassi alleged in his complaint that TIB was negligent in (1) providing him with adequate insurance coverage and (2) preparing and submitting his insurance application.

At trial, TIB moved for summary judgment on the ground that Alabassi failed to offer expert testimony establishing essential elements of his negligence claim. The district court granted summary judgment for TIB, agreeing that expert testimony was required to prove Alabassi’s claim that TIB had breached its duty of care.

ANALYSIS

To succeed on a negligence claim a plaintiff must show that the defendant breached a duty of care owed to the plaintiff and thereby caused the plaintiff’s damages. When a claim of negligence is based on an allegation that a professional was negligent, the plaintiff must show that the professional’s conduct fell below the standard of care associated with that profession.  For those practicing a profession involving specialized knowledge or skill, reasonable care requires the actor to possess a standard minimum of special knowledge and ability consistent with members of the profession in good standing. In such professional negligence cases, expert testimony is ordinarily necessary to help the factfinder determine the applicable standard of care because in most cases such standards are not within the purview of ordinary persons.

A defendant’s standard of care must be established by expert testimony when the applicable standard is outside the common knowledge and experience of ordinary persons. The standard of care in Alabassi’s suit was based on TIB’s determination of the proper insurance for Alabassi—a determination requiring knowledge of terms and practices specific to the insurance industry. For instance, Alabassi’s complaint alleged that TIB failed to meet its standard of care in providing Alabassi with adequate insurance for the following reasons:

  1. TIB failed to offer uninsured motorist limits equal to the bodily injury limits included in Alabassi’s policy.
  2. TIB failed to provide proper disclosure and guidance by failing to advise, confer, and evaluate plaintiff’s needs; and
  3. TIB failed to procure insurance that would cover any rented, borrowed, or temporary prudent insurance broker would determine the proper policy for a client nor whether TIB’s conduct was consistent with those practices.

Consequently, the district court did not err when it decided that expert testimony was necessary to establish whether TIB failed to meet its duty of care in providing Alabassi with adequate insurance coverage. In response, Alabassi appears to argue that expert testimony is never needed to prove that an insurer breached its duty of care because insurers have a duty to act with only “reasonable care” toward their insureds.

Expert testimony was necessary to prove Alabassi’s claim that TIB failed to use reasonable care in preparing and submitting Alabassi’s insurance application. Alabassi contended that expert testimony was not needed because submitting an application with inconsistent answers is an error that does not require specialized skill or knowledge to comprehend. His argument failed, however, because the coverage selection form at issue contains terms specific to the insurance industry that are outside the knowledge of ordinary persons.

Because Alabassi’s allegations that TIB was negligent were based on an understanding of terms and practices outside the common knowledge and experience of ordinary persons. Therefore, the USCA concluded that the district court did not err by deciding that expert testimony was required and affirmed the trial court.

ZALMA OPINION

As a person who testifies occasionally as an expert witness concerning insurance claims and claims handling that is outside the experience of ordinary persons, the decision of the Tenth Circuit makes reasonable sense. To try to hold an insurance agent liable for the failure to advise about the proper limits to acquire from an insurer and which type of limits to acquire, it should always be necessary to call an expert witness to explain the custom and practice of insurance agents in the state and explain why, or why not, the agent breached the duty of care to the damage of the insured.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  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 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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