In the case of first impression The District Court of Appeals of Florida, Fifth District clarified what a policyholder must prove in order to succeed on claims of breach of fiduciary duty and negligent misrepresentation against its insurance broker/agent as well as the measure of damages for those claims.
The policyowner, who owned two restaurants, retained an insurance agent/broker to procure property insurance for the restaurants. The insurance agent/broker made representations as to the coverage which could be procured and then subsequently procured policies from the insurer. Following procurement of the policies, Hurricane Matthew hit Florida and caused a sewage backup at the restaurants causing substantial damage. The insurer denied coverage on the grounds its policies did not cover the damage and obtained summary judgment ruling in its favor after filing a declaratory judgment that no coverage was available.
After the summary judgment was affirmed on appeal, the policyholder sued its broker/agent alleging negligent failure to procure insurance, breach of fiduciary duty, and negligent misrepresentation. The case proceeded to trial which resulted in a jury finding in favor of the broker/agent on the claim for negligent procurement of insurance but finding in favor of the policyholder on the claims for breach of fiduciary duty and negligent misrepresentation. After assessing comparative fault to the restaurants the jury awarded damages based on the policy which had previously been found in the prior declaratory judgment action did not provide coverage.
The appellate court held that in a suit alleging failure to procure insurance the policyholder must show an insurance policy existed in the marketplace that would have covered the policyholder’s damages. However, the appellate court found this rule does not apply to breach of fiduciary duty and negligent misrepresentation claims because those claims do not depend on the existence of a specific insurance policy as an insurance agent/broker could be liable for failing to inform the policyholder the requested insurance could not be procured. The appellate court found no error in failing to instruct the jury that proof of available insurance in the marketplace was required for recovery for breach of fiduciary duty and negligent misrepresentation claims. As to those claims, damages are not necessarily limited to the insurance coverage that could have been procured as consequential or resulting collateral damage, like lost profits, may be recovered if sufficiently proved.
However, the jury’s damage award was largely based on the policy which was procured but was found not to provide any coverage. Therefore, the appellate court found it was error to allow the jury to calculate damages based on a policy that does not provide coverage. Because the error was not harmless the appellate court remanded for a retrial limited solely to damages without reliance on the policy which was actually procured.
The lesson learned here for insurance agents or brokers in Florida, and perhaps elsewhere, is if you agree to undertake to procure a certain insurance coverage within a reasonable time and the agent/broker fails to do so even if it is not the agent/broker’s fault for the failure, the agent/broker could still become liable for damages if the agent/broker fails to inform its policyholder client that the requested insurance has not been procured. Thus, a reasonable fact finder could find even if the insurance the policyholder wanted was unavailable in the marketplace the agent/broker should timely notify its client so it can consider other alternatives.
Case Citation: Brown & Brown of Florida, Inc. v. Houligan’s Pub & Club Inc., 427 So.3d 153 (Fl.App. 2026)
