City Blueprint & Supply Co., Inc. v. Boggio

Louisiana Court of Appeal
3 So.3d 62, 2008 La. App. LEXIS 1802, 2008 La.App. 4 Cir. 1093 (2008)

ELI5:

Sections

Rule of Law:

An insurance agent does not have an affirmative duty to spontaneously advise a client regarding specific coverage needs or procure unrequested insurance, and an insured cannot claim negligent misrepresentation based on an assumption of coverage if they failed to read the policy containing a clear exclusion.

Facts:

The Mahoney brothers became the sole owners of City Blueprint and continued a long-standing business relationship with insurance agent Bob Boggio and Morrison, Inc.
The brothers met with Boggio annually to renew their Commercial Package insurance policy.
At no point did the brothers specifically request flood insurance or inquire if their current policy included flood coverage.
Boggio allegedly assured the brothers they were 'fully covered,' leading them to assume this included flood protection.
Boggio procured a commercial policy for the business that contained a specific, straightforward exclusion for flood damage.
Neither brother read the insurance policy to verify the coverage or exclusions.
Hurricane Katrina caused significant flood damage to the City Blueprint property.
After the storm, the brothers discovered they lacked flood insurance coverage and the policy excluded the damage.

Procedural Posture:

City Blueprint sued Boggio and Morrison, Inc. in the trial court asserting negligence, breach of fiduciary duty, and negligent misrepresentation.
The defendants filed a Motion for Summary Judgment arguing they owed no duty to procure flood insurance or advise the plaintiffs.
The trial court granted the Motion for Summary Judgment and dismissed the claims against the defendants.
City Blueprint appealed the judgment to the Court of Appeal of Louisiana, Fourth Circuit.

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Issue:

Does an insurance agent owe a fiduciary duty to spontaneously advise a client to procure flood insurance, and can an agent be liable for negligent misrepresentation for stating a client is 'fully covered' when the client failed to request such coverage or read the policy containing a flood exclusion?

Opinions:

Majority - Judge Edwin A. Lombard

No, an insurance agent is not liable for failing to procure unrequested coverage or for general assurances when the policy explicitly excludes the risk. The court reasoned that under the 'Porter' analysis, there was no undertaking to procure insurance because the plaintiffs never requested flood coverage. Regarding the duty to advise, the court held that Louisiana law does not impose a duty on agents to spontaneously identify a client's needs or advise on underinsurance. Furthermore, the claim of negligent misrepresentation failed because the plaintiffs' reliance on the agent's statement was not justifiable; the law imposes a duty on the insured to read their policy, and a simple review would have revealed the flood exclusion.

Analysis:

This decision significantly reinforces the 'duty to read' doctrine in Louisiana insurance law. It limits the professional liability of insurance agents by establishing that they act as order-takers rather than risk managers unless specifically requested otherwise. By placing the burden on the insured to verify policy terms and exclusions, the court prevents business owners from relying on vague oral assurances like being 'fully covered.' This outcome protects agents from hindsight liability for catastrophic events (like Hurricane Katrina) where clients failed to secure specific protections.

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