Failure to Read Policy Expensive

Insurer’s Duty Limited to Provide the Insurance Ordered

Insurance is nothing more than a contract between an insured and an insurer. The insured submits an application to the insurer seeking an offer of insurance. When the insurer offers the insurance requested by the application the insured can either accept or reject the offer. If the offer is accepted the insurance is issued in accordance with the offer. It is the obligation of the insured to make sure the insurance issued is the insurance ordered. When the insured fails to protect him or herself they will try to get the coverage needed by accusing the insurer of negligence.

In AgCountry Farm Credit Services, ACA v. Richard Steven Elbert, A17-1413, State Of Minnesota In Court Of Appeals (May 7, 2018) Richard Steven Elbert unsuccessfully tried to compel an insurer to provide coverage not originally requested. He lost and challenged the district court’s grant of summary judgment in respondent-insurer AgCountry Farm Credit Services, ACA’s (AgCountry) favor on his negligence counterclaim arising out of a breach-of-contract action.


Elbert is a farmer in Olivia, Minnesota. Elbert purchased multi-peril crop insurance and hail insurance from AgCountry, successor-in-interest to United FCS, for his 2015 farming operation. When Elbert failed to make his crop insurance premium payment by the contractual deadline, AgCountry filed a civil action for payment of the crop insurance premium. Elbert filed an answer conceding that the insurance premium was due and owing but counterclaiming that AgCountry’s damages were the result of its own negligence. Specifically, Elbert asserted that AgCountry failed to include a 118.8-acre tract of Elbert’s crop land in the insurance policy. Elbert was unable to harvest the crop grown on the 118.8-acre tract and claimed that, if the land had been properly covered under his insurance policy, he would have received an insurance reimbursement.

The district court granted summary judgment to AgCountry on its breach-of-contract claim and on Elbert’s counterclaim. The district court found that Elbert submitted a crop-insurance application to his insurer in May 2015, detailing the acreage to be covered, which did not include the 118.8-acre tract of land. In July 2015, the insurance company sent Elbert an insurance letter listing the identical acreage requested in the application. The insurance letter urged Elbert to carefully review the information and notify the insurer immediately of any errors. Elbert did not alert his insurer as to any unlisted acreage and, as a result, Elbert’s 2015 crop-insurance policy did not include the 118.8-acre tract of land.


The district court did not err in granting summary judgment on appellant’s negligence counterclaim.

Summary judgment is properly rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law. The evidence is viewed in the light most favorable to the party against whom judgment was granted.

Elbert argued that AgCountry is vicariously liable for the actions of his insurance agent under a principle-agent relationship. To establish a negligence claim against an insurer, a party must show (1) the existence of a duty; (2) a breach of the duty; (3) causation; and (4) damages. Absent an agreement to the contrary, the scope of this duty is limited to acting in good faith and following the insured’s instructions. Thus, an insurer is under no affirmative duty to take other actions on behalf of the client if the typical principal-agency relationship exists

The district court determined that there were no genuine issues of material fact pertaining to Elbert’s negligence counterclaim because AgCountry satisfied its general duty of care to Elbert by providing the insurance requested. AgCountry satisfied its duty of care by acting in good faith and by following Elbert’s express instructions regarding his insurance coverage.

The District Court Did Not Err By Declining To Impose A Heightened Duty Of Care Based On Special Circumstances.

Insurance consumers are responsible for educating themselves in matters concerning their insurance coverage. However, under special circumstances an insurer may have a duty to take some sort of affirmative action, rather than just follow the instructions of the client. Factors to consider in determining whether special circumstances exist include whether: (1) the insurer knew the insured was unsophisticated in insurance matters; (2) the insurer knew the insured relied upon the insurer to provide appropriate coverage; and (3) the insurer knew the insured needed protection from a specific threat.

Elbert argued that he relied on AgCountry to provide appropriate crop insurance coverage. To create a special circumstance the record would have to reflect that Elbert delegated decision-making authority to AgCountry for his insurance needs. Here, the record shows that AgCountry does not offer common insurance policies such as auto insurance, health insurance, or homeowner’s insurance. Thus, Elbert could not have placed all of his insurance needs into AgCountry’s hands. Moreover, Elbert has not presented sufficient evidence demonstrating that he was “unsophisticated in insurance matters” or needed protection from a “specific threat.”

The district court did not err by declining to recognize a special circumstance.


It is time that insured’s take responsibility for their own errors and stop bringing this type of action to the court to try to impose on an insurer or insurance broker the obligation to read the policy to make sure it provides the coverage ordered. Elbert received the insurance he ordered and could not compel the insurer to provide the coverage he needed instead of the coverage he ordered. His attempt to make his insurer cure his error failed.

© 2018 – Barry Zalma

This article, and all of the blog posts on this site, digest 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  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 50 years in the insurance business. He is available at and

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

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The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.


About Barry Zalma

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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