“Multi-State Analysis Of An Insurance Broker’s Duties To Non-Clients”

On a Saturday afternoon, Douglas Johnson and David Brown attended a baseball game between the Cleveland Indians and the Washington Nationals. Before the first pitch, while in the stadium's concourse, they heard screaming behind them. They turned around but could not avoid a collapsing 25-foot tall inflatable slide, which had been set up for children attending the game. Johnson and Brown were pinned under the 400-pound slide, and while Brown managed to free himself, Johnson suffered more severe injuries that ultimately led to his death. 

Though the inflatable slide was located at the Cleveland Indians' stadium, it was part of an event run by National Pastime Sports, LLC ('National'). Pursuant to a contract with the Cleveland Indians, National was required to obtain a comprehensive general liability insurance policy that named the Cleveland Indians as an additional insured. To procure the required coverage, National engaged an insurance broker, CSI Insurance Group ('CSI'). In the insurance application given to CSI, National expressly stated that it required coverage for 'bounce houses or inflatables.' CSI procured a policy and issued certificates of insurance to National and the Cleveland Indians. The policy, however, excluded losses arising frombounce houses or inflatables. Thus, when Johnson and Brown brought personal injury claims, the Cleveland Indians learned that the loss was not covered by the policy purchased specifically for the event. Notably, while CSI had issued certificates of insurance, it did not distribute the policy to National or the Cleveland Indians before the loss occurred. 

The Cleveland Indians sued CSI for negligence, and that case raises the issue of whether, and under what circumstances, an insurance broker may be held liable for negligent performance or professional malpractice to parties other than the party that engaged the broker's services. Different schools of thought have emerged regarding this recurrent issue, and state courts generally follow one of three approaches (with the Cleveland Indians case illustrating a middle-ground approach). This article explores these three approaches.

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