What can you expect from your insurance agent? When you buy home or flood insurance, is your insurance agent required to help you make the best decision based upon your finances and the location and condition of your home? Or, can he or she simply try to sell you the coverage that generates the biggest commission? In a recent case that has important implications for Florida homeowners, the U.S. Court of Appeals for the Fifth Circuit (Florida is in the Fifth Circuit) ruled that insurance agents are not subject to a fiduciary standard.
What is a Fiduciary?
To understand what it means for an insurance agent not to have a fiduciary duty, it is first necessary to understand the meaning of the term “fiduciary.” When someone acts in a fiduciary capacity, he or she must offer advice in the best interests of his or her client or customer. A fiduciary is prohibited from engaging in transactions that involve conflicts of interests, and a fiduciary may not prioritize his or her own profits or revenue above the financial wellbeing of the person to whom the fiduciary duty is owed.
But, if an insurance agent is not a fiduciary, then he or she is not subject to any of these obligations. In other words, an insurance agent does not need to provide coverage recommendations based upon what is best for the homeowner. When buying home or flood insurance, this is important to keep in mind. What is best (or necessary) for you may not necessarily be want your insurance agent wants to offer; and, as a result, you should make coverage decisions based upon your own independent assessment of your family’s needs.
Lack of Fiduciary Duty vs. Fraud
While insurance agents may not owe a fiduciary duty in Florida under federal law, there are still limits to the lengths they can go when dealing with homeowners. The same goes for adjusters and other insurance company employees as well. Insurance agents and adjusters cannot misrepresent the terms of coverage or the costs involved, and they cannot deny coverage based on illegitimate grounds. Homeowners are entitled to the protections afforded under the Florida Homeowner Claims Bill of Rights (among various other legal protections), and those who are treated unfairly may be entitled to financial compensation for bad-faith insurance practices or insurance company fraud.
If Your Insurance Agent or Adjuster Has Been Less than Truthful . . .
If you believe that your insurance agent or adjuster may have withheld relevant information or misrepresented your rights as a policyholder, you should speak with an attorney. Bad faith insurance practices and insurance company fraud can lead to substantial costs for homeowners; and, if you are a victim of bad faith or fraud, it is important that you hold your insurance company accountable. Unfortunately, these types of insurance practices are common; and, as a homeowner, you should not assume that your insurance agent or adjuster is acting with your best interests in mind.
Contact Saavedra | Goodwin for More Information
For more information about your rights as a Florida homeowner, you can contact our Fort Lauderdale law offices to schedule an initial consultation with one of our property damage attorneys. To discuss your situation in confidence, please call (954) 767-6333 or inquire online today.