Insurance agents may wonder whether an insured has a duty to notify an insurer of material changes in exposure other than through the normal application process.
According to a recent appeals court decision (see here & here) an insured does not.
The case involved a commercial auto policy which was renewed for 9 years with no renewal application requested or provided.
The case involved a commercial auto policy which was renewed for 9 years with no renewal application requested or provided.
During this time the insured owner stopped conducting his business through the company and conducted the business personally.
He never notified the insurer, and said the agent never passed along any requests for information from the insurer.
An insured was involved in an accident in 2003, and the insurer sought to void coverage due to the failure to provide material information.
In this particular situation the court, on appeal, concluded that the insured does not have a duty to notify an insurer if not asked.
In this particular situation the court, on appeal, concluded that the insured does not have a duty to notify an insurer if not asked.
[U]nless a provision in the insurance policy or a renewal application requires the insured to notify the insurer of particular changes, the insured is under no duty to identify changes that are material and notify the insurer of such changes
This may explain the numerous questions and representations required on a professional liability application. And might the insurer try to hang this on the agent?
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