Mealey's Emerging Insurance Disputes
Voss v. Netherlands Insurance Co. and Its Implications For Broker Negligence Actions In New York
New York law has traditionally created a very high hurdle for clients seeking to allege negligence claims against insurance brokers based upon the broker's failure to recommend adequate coverage. Indeed, a client seeking to assert such a claim has been required to allege fact sufficient to support a "special relationship."
In Voss v. Netherlands Insurance Co., the plaintiff-insured brought a claim against her insurance broker for negligent procurement arising out of the broker's alleged failure to recommend adequate coverage. The state trial and appellate courts held that plaintiff had failed to allege facts sufficient to create a special relationship, which could impose upon the broker the duty to have affirmatively recommended that plaintiff obtain additional coverage. The New York Court of Appeals reversed and, for the first time ever, held that a plaintiff had alleged facts sufficient to create a triable issue of fact regarding whether a special relationship existed between the plaintiff and the broker.
The Voss decision, by itself, does not announce a new rule; nor does it expressly advise trial courts to lower what has traditionally been a relatively high bar to broker negligence actions under New York law. In fact, Voss is entirely consistent with prior decisions from the Court of Appeals and the Appellate Division – it would have been more remarkable if the Court of Appeals had simply affirmed. The question, then, which only time will answer, is whether counsel representing insureds who find themselves without coverage will be more willing to bring broker negligence actions, and whether trial and appellate courts will be more receptive to such claims, notwithstanding that Voss does not, at least expressly, open the door any wider for such claims.