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Examples of Insurance Agent & Broker Malpractice

Wed Aug 31st, 2022 on     Bad Faith Insurance,    

People rely on their insurance agents and brokers for assistance with multiple matters, including advising them on the type of insurance they need as well as the policy limits they should secure. When agents and brokers fail to follow through with their obligations, insured parties often suffer a loss, and they need a way to recover for that loss. At Ver Ploeg & Marino, a Miami insurance recovery lawyer helps our clients determine when their agent or broker committed malpractice and if they have, our team works to obtain the compensation our clients deserve. 

Difference Between Insurance Agents & Insurance Brokers

Before we dive into examples of insurance agent and broker malpractice, it is important to explain the difference between agents and brokers. An insurance agent typically represents one particular insurance company, while a broker sells for a variety of different insurance companies. When looking at recovering for agent or broker negligence, it matters which one you are dealing with because who they owe a duty to and who they represent will make a difference. Your Miami insurance recovery lawyer will go over this with you and advise on how it can affect your compensation. 


Insurance agents and brokers are under a duty to provide accurate information to clients and potential clients. Nevertheless, one claim that is often made against insurance brokers and agents is that they misrepresented important information. This can include:

  • Misrepresenting the type and amount of the deductible
  • Misrepresenting the type of coverage of the insurance policy
  • Misrepresenting the coverage amount of the policy
  • Misrepresenting the extent of losses covered by the insurance policy

When insureds rely on the incorrect information provided by their insurance agents and brokers, they may suffer a financial loss. 

Misrepresentations are sometimes unintentional, meaning the agent or broker was under the impression that the information they were providing was true. Other misrepresentations are intentional or fraudulent. The most common types of claims are neither unintentional or fraudulent; rather, they are negligent. Negligent representations are made when an agent or broker is not aware (but should have known) that the information they are relaying is incorrect. Typically, had the agent or broker followed through with their due diligence, they would have been aware that the information they were giving the client was not correct. Deciding the type of misrepresentation, and the extent of the damage it caused, is a matter to be addressed by a Miami insurance recovery lawyer

Inappropriate or Inadequate Coverage

Another common malpractice complaint made by policyholders is that their agent or broker sold them inappropriate or inadequate insurance. This usually happens because the agent or broker does not take the time to get to know what their client, or their client’s business, needs. Agents and brokers should ensure they know the risks their potential clients face and obtain the coverage that they need. 

Unfortunately, many insured’s do not realize that they have inadequate or inappropriate insurance until they have suffered a loss. Then, after filing the claim, they find out they do not have the coverage they need, or if they do have it, it is not in an amount large enough to cover their losses. For example, a homeowner that loses their home in a fire may file a claim for their losses only to find out they will not be receiving compensation in an amount to place them in the position they were in before the fire. In cases like this, it is best for the homeowner to meet with a Miami insurance recovery lawyer to find out what recourse may be available.

Failure to Communicate With Clients

Insurance agents and brokers must keep an open line of communication with their clients. They must adequately explain the policy to clients, including the following information:

  • The terms of the policy, including their coverage limits and deductible amounts
  • When premiums are due
  • Any updates or changes to the policy

The duty to communicate does not stop there. Insurance agents and brokers need to be certain that their clients understand what they are purchasing when they buy a policy from them. Agents and brokers sometimes oversell or state that the policy offers coverage that it doesn’t in order to push the sale of a policy, and this can lead to malpractice claims. 

Administrative Errors & Failure to Actually Purchase Insurance

One nightmare scenario seen by our Miami insurance recovery lawyer is when an insured mistakenly believes they have purchased an insurance policy. They have completed the necessary paperwork and paid their premium, yet when they suffer a loss and need their coverage the most, they find out their agent or broker never actually purchased the insurance policy. 

For example, let’s say a person instructs their insurance agent or broker to add long-term disability coverage to their policy, but the agent or broker fails to do so. The insured later suffers an injury that will take a substantial time to recover from. When the insured tries to make a claim under their long-term disability policy, they realize that their agent or broker never actually purchased the policy. The insured may be able to recover for this loss by filing a malpractice lawsuit against the insurance agent or broker. 

The administrative errors our Miami insurance recovery lawyer usually sees are not intentional but a result of negligence. Insurance agents and brokers use different systems to organize their files and complete policy documentation. By including the wrong information in these programs, policies may contain errors. A system of checks and balances needs to be in place to catch any errors before they wreak havoc. 

Insurance agents and brokers also need to stay on top of their staff, ensuring they have appropriate training.  

Speak With A Miami Insurance Recovery Lawyer At Ver Ploeg & Marino

A Miami insurance recovery lawyer at Ver Ploeg & Marino is here to help when your insurance agent or broker has committed malpractice. We are a firm that focuses on representing policyholders, and we are experienced in handling agent and broker negligence claims. Contact us to find out more about how we can assist you.

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