Duties and Liabilities of Insurance Brokers – 2
In California an independent insurance broker is not an agent of the insurer, but rather of the insured. The California Second
District Court of Appeal cast doubt on whether an insurance broker serves in a fiduciary capacity. By so doing it limited the ability of an aggrieved client to obtain punitive damages as a result of the broker’s error. In reaching its conclusion the court noted that a fiduciary relationship has been defined as any relation existing between parties to a transaction wherein one of the parties is duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent.
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