Simply put, an insurance agent has no general duty to advise its insureds, with regard to essentially anything after the issuance of the policy. In Maryland, as well as other jurisdictions, the basis for not holding agents to a standard of care stems from a fear that to do so would create a situation where the tort floodgates would open to allow claims against brokers whenever an incident surrounding the policy occurs. While the question of duty can become more complex when the agent is acting on behalf of the insured, as opposed to the insurance company, the question is not affected in a relevant way.
Regardless of the status of the agent, when viewed exclusively in the insurance context, once the policy is issued, the insured is responsible for noticing any problems with the policy and bringing them to the attention of the agent immediately. With regard to administration of the policy following issuance, the basis for not requiring a duty of care stems from a belief that such would require an agent to continuously monitor a clients assets and adjust coverage accordingly. Since agents are generally in a position where they must rely on the information given to them by the insured, imposing a duty of care is unreasonable.
In rare circumstances, Maryland courts will only go beyond the above mentioned bright-lined approach in situations where there is a “special relationship”. Otherwise, any causes of action arising after the policy has been issued will need to be prosecuted against the actual policy provider (the insurance company), not the agent. Keep in mind, however, that there is a potential action against an agent for negligence in situations where, for example, the agent did not recommend the proper amount of coverage or failed to list the proper parties or beneficiaries.
For more information on this or other insurance issues, please contact Bill Sinclair, head of STSW’s commercial litigation group, at 410-385-9116 or firstname.lastname@example.org