For years, the viability of suits brought by policyholders against insurance agents has been up in the air. On March 7, the Florida Supreme Court decided the long awaited Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., paving the way for policyholders to recover when they have been damaged by their agent’s negligence.

Tiara Condominium retained Marsh & McLennan as its insurance broker and tasked Marsh with securing insurance coverage for the association, including coverage for damages resulting from windstorm.

In 2004, Tiara was significantly damaged by Hurricanes Frances and Jeanne. Marsh & McLennan assured Tiara that the policy provided “per occurrence” coverage, meaning Tiara could recover up to the policy limit of $50 million for each storm. This would have created an aggregate coverage of $100 million for the damages sustained.

Based on the representations from its broker, Tiara undertook extensive, and expensive, repairs to the property. When Tiara sought payment from its insurance carrier, however, the carrier claimed that the policy limited payment to the policy limit of $50 million instead of the aggregate $100 million.

Tiara filed suit against its insurance company and eventually settled for $89 million. While this was more than the single policy limit the insurance carrier contended was applicable, it was substantially less than the $100 million dollars Tiara spent repairing the building. Tiara then filed suit against Marsh & McLennan for negligence and breach of fiduciary duty. Tiara alleged Marsh & McLennan failed to advise Tiara of its complete needs in procuring insurance and failed to advise Tiara of its belief that Tiara was underinsured.

The trial court granted summary judgment on for Marsh & McLennan on all counts, however, the 11th Circuit Court of Appeals did not affirm summary judgment on the negligence and breach of fiduciary duty actions. The 11th Circuit certified the following question to the Florida Supreme Court:


The economic loss rule is a legal doctrine that’s interpretation and application causes confusion to even the most experienced attorneys. Anyone wishing to read more into the matter can see the detailed history and analysis provided in the Court’s opinion. Let’s just say that if the rule had applied, there would have been no cause of action that could have been asserted by a policyholder.

In deciding the case, the Florida Supreme Court noted the application of the economic loss rule had been impermissibly expanded far beyond its original intent. The Court receded from its prior rulings and held that the rule was only applicable in the products liability context. So actions brought by policyholders against insurance agents for negligently procuring coverage can and will continue.

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Founded in 1985, our law firm continues to be dedicated to representing insurance policyholders throughout the United States. Collectively, our lawyers are licensed to practice in 25 states. In fact, many of Merlin Law Group’s attorneys worked for the insurance industry before joining the firm, so they bring a strong understanding of insurance company practices. Anyone can file a claim, but it takes experience, knowledge, and savvy to achieve a truly successful outcome. As The Policyholder’s Advocate®, Merlin Law Group aims to drive positive change within the insurance sector by obtaining justice for our clients and educating policyholders on how to navigate insurer bad faith tactics.

When we handle property insurance claim disputes, we hire the most experienced and qualified expert witnesses to evaluate your insurance claim and testify on your behalf. In most cases, we can advance the fees for this. Typically, we hire experts such as engineers, contractors, independent roofing consultants and other professionals to perform a thorough assessment on all possible causes of damages. This is a process that provides us with a very detailed and all-inclusive estimate for determining and justifying a proper settlement. Our use of these professional expert witnesses sets us apart from other insurance law firms.

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