NY High Court Chips Away At Broker Liability Shield

  • March 3, 2014

New York's top court last week allowed a lawsuit against an insurance broker to proceed because of a potential “special relationship” between the broker and its client, the latest ruling to gnaw away at protections that brokers have long enjoyed against lawsuits from unhappy policyholders.

Many policyholders haven't bothered to bring lawsuits against their brokers because of tough requirements under New York law, but the Voss ruling may encourage them to think twice, according to Anderson Kill PC shareholder Robert Chesler.

“It's not a total change, it's an incremental change,” Chesler said. “I think it opens the door enough for people to bring broker malpractice actions, especially in the wake of Sandy.”

The ruling against CHI comes a little more than a year after the New York Court of Appeals held that a policyholder's failure to review insurance coverage does not bar it from suing insurance agents and brokers over insufficient coverage.

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