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Boerman v. American Empire Surplus Lines Ins. Co.

ELR Citation: 33 ELR 20103
Nos. No. 01-2547, 50 Fed. Appx. 248/(6th Cir., 11/01/2002)

The court affirms a district court decision that by failing to notify its insurer of a suit and subsequent judgment against it, a Michigan underground storage tank removal company did not trigger coverage or indemnification under its claims-made policy. Although the company never notified its insurer about the lawsuit, it argued that the district court should not have granted summary judgment to the insurer because a question of fact exists as to whether a special relationship arose between the company and its insurance agenct sufficient to bind the insurer to the representations of the agent. According to the company, the insurance agent represented that the insurer provided continuous coverage without the purchase of an extended discovery rider as long as the policy was continuously renewed. The court first holds that under Michigan law, an insurance agent whose principal is an insurance company has no duty to advise a potential insured about coverage limits, except in cases where a special relationship arises between the agent and the insured. A special relationship between an insurance agent and a policyholder only exists when certain conditions are met. The court next holds that here, a special relationship does not exist because the insurance agent was an independent agent, and independent agents are the agent of the insured, not the insurer. Thus, the company is unable to raise a genuine issue of fact sufficient to show a special relationship that would bind the insurer to any representation of coverage.

Counsel for Plaintiff
James I. Marchant
Marchant Law Offices
3980 Beitner Rd., Trevor City MI 49684
(231) 943-7920

Counsel for Defendant
Craig H. Lubben
Miller, Johnson, Snell & Cummiskey
303 N. Rose St., Ste. 600, Kalamazoo MI 49007
(616) 226-2950