When Can an Insurance Carrier be Liable for the Actions of its Agents?

Florida law distinguishes between insurance agents and insurance brokers.¹ In Essex Ins. Co. v. Zota, the Florida Supreme Court defined an insurance broker as an individual who “represents the insured by acting as a middleman between the insured and the insurer, soliciting insurance from the public under no employment from any special company…[and] places it with a company selected by the insured.”² If the insured has no preference as to the company, the broker can select the company.³ An insurance agent, on the other hand, is someone who “represents an insurer under an exclusive employment agreement by the insurance company.”⁴

The distinction is significant because, generally, “the acts of an agent are imputable to the insurer and the acts of a broker are imputable to the insured.”⁵ For example, a broker may be employed by the insured for the specific purpose of obtaining a policy of insurance, whereas an insurance carrier and an agent may have an ongoing and continuous relationship.⁶ Because of this relationship, insurance agents are sometimes referred to as “captive agents” where their actions can bind the carrier.⁷

Courts distinguish between three different agency relationships: actual, apparent, and statutory.⁸

To establish actual agency, there must be:

1. An acknowledgment by the principal that the agent will act for him;
2. acceptance by the agent of the undertaking; and
3. control by the principal over the agent’s actions.⁹

To demonstrate apparent agency, a court must determine:

1. There was a representation by the principal;
2. the injured party relied on that representation; and
3. the injured party changed position in reliance upon the representation and suffered detriment.¹⁰

Finally, an agency relationship can be found by statute, and between an insurance broker and a carrier.¹¹

Under section 626.342(2) of the Florida Statutes, statutory agency can occur when an insurance company furnishes to a broker company materials, which can include forms and applications used to solicit or negotiate a contract, and the insurance company then accepts business from that broker.¹² In this type of circumstance, the broker’s actions can impute civil liability onto the carrier as if the carrier had designated the broker as its agent (an exception exists when an insured knew or was put on notice that the broker had limited actual authority).¹³

As discussed, more than one form of agency relationship exists between a carrier and agent or broker. If any of the three mentioned agency relationships can be established, a carrier can be found liable for the actions of these individuals.
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¹ Essex Ins. Co. v. Zota, 985 So. 2d 1036, 1046 (Fla. 2008).
² Id.
³ Id.
⁴ Id.
⁵ Id.
⁶ Amstar Ins. Co. v. Cadet, 862 So. 2d 736, 740 (Fla. 5th DCA 2003).
⁷ Amstar Ins. Co., 862 So. 2d at 740.
⁸ Amstar Ins. Co., 862 So. 2d at 740.
⁹ Amstar Ins. Co., 862 So. 2d at 741.
¹⁰ Amstar Ins. Co., 862 So. 2d at 741, 742.
¹¹ Amstar Ins. Co., 862 So. 2d at 740-741, 739.
¹² Amstar Ins. Co., 862 So. 2d at 741, 742.
¹³ Amstar Ins. Co., 862 So. 2d at 741.