Florida Insurance Agent Standard of Care and the “Special Relationship” They Share with the Insured

In Florida, insurance agents play a vital role in helping clients navigate the complexities of insurance coverage. The standard of care required of these agents ensures that clients are properly advised and that their insurance needs are met, while also protecting the agent’s professional integrity. This standard holds agents to fiduciary responsibilities and mandates that they act in the best interests of their clients.

The standard of care for insurance agents in Florida is governed by several key principles, which guide how agents interact with clients, procure insurance, and provide advice. Below are the fundamental duties that agents owe to their clients:

Duty to Use Reasonable Skill and Care to Procure Requested Insurance

The first and foremost responsibility of an insurance agent is to use reasonable skill and care when securing insurance for a client. This includes procuring the insurance that the client specifically requests. If an agent is unable to secure the requested coverage, they are obligated to promptly notify the insured and offer alternative solutions or explanations. Failure to secure the right insurance or notify the client of its unavailability could lead to liability for the agent.

Duty to Provide Non-Negligent Advice

When providing advice related to insurance, Florida agents are required to do so in a non-negligent manner. This means that agents must provide accurate, well-informed guidance when helping clients select or adjust coverage. If an agent offers negligent advice—whether it’s recommending unnecessary coverage, misrepresenting policy details, or failing to highlight important exclusions—the insured may have grounds for a legal claim against the agent for negligence.

Duty to Obtain Coverage Based on the Insured’s Needs

Another critical aspect of an agent’s duty is ensuring that the insurance coverage they secure aligns with the expressed needs of the insured. This requires the agent to assess the client’s situation carefully and procure coverage that clearly meets their unique requirements. For example, an agent should not suggest a basic homeowner’s insurance policy if the client’s property requires a higher level of protection. A failure to match the coverage to the client’s needs can expose the agent to liability.

Fiduciary Duty to Inform and Explain Coverage

As a fiduciary, the agent must act in the best interests of the insured. This includes providing clear and detailed explanations about the insurance policies they secure. The agent must ensure that the insured understands the coverage they have purchased, and all the terms and conditions attached to the policy. Additionally, agents are prohibited from making unilateral changes to the policy without first consulting the insured. Changes in coverage, endorsements, or exclusions should always be communicated and explained to the client.

The Role of “Special Relationship” in Florida Insurance Law

In Tiara Condo. Association v. Marsh, ¹ the federal court clarified that a “special relationship” between an agent and an insured can establish an enhanced duty for the agent to advise the insured on the types and amounts of coverage reasonably needed. The court noted that such a special relationship may arise under several circumstances, including:

1. When the agent assumes responsibility for selecting the appropriate policy, either through express agreement or promise.
2. When the agent is recognized as an expert in a particular area and the insured relies on this expertise.
3. When the agent exercises broad discretion over the insured’s coverage.
4. When the agent is deeply involved in the insured’s business affairs or routinely provides guidance on maintaining appropriate coverage.
5. When the relationship between the agent and the insured is long-standing and in-depth.
6. When the agent proactively offers advice about the insured’s needs.
7. When the agent receives additional compensation for advisory services.

Although the jury in this case found that no special relationship existed, Tiara sets Florida’s standard for identifying such a relationship. The “special relationship” is most likely to arise in situations where the agent has a comprehensive and ongoing understanding of the insured’s circumstances, such as managing all of a client’s insurance needs over several years. In these cases, the agent may be required to go beyond simple transactions, offering proactive guidance and addressing potential coverage gaps.

In Florida, insurance agents are held to a high standard of care, ensuring that they act with reasonable skill, provide competent advice, and secure coverage that matches the client’s needs. Agents are also required to communicate clearly and explain policy terms to ensure clients are fully informed. The concept of a “special relationship” further elevates the agent’s duty to advise, especially when there is an ongoing, intimate understanding of the insured’s needs.

¹ Tiara Condo. Ass’n, Inc. v. Marsh, USA, Inc., 991 F. Supp. 2d 1271 (S.D. Fla. 2014).