How Special is Special? An Insurance Agent's Duty to Advise

Abstract

Insurance is an $800 billion a year industry in the United States. Hundreds of different policy options are offered in the areas of commercial, automobile, home, and life insurance. Most policies are purchased through an insurance agent or broker who may represent either one company’s product line or several. Insurance agencies alone have $50 billion in revenue annually. Despite the fact that insurance is a large and often complex industry, the law has been reluctant to place any burden on the insurance agent to provide advice to consumers. This article focuses solely on the relationship between the agent and the consumer and examines the question of when the agent should be under a duty to advise clients as to proper coverage and policy limits. The article first focuses on Minnesota legal standards and case law. Next, the article surveys the national response to this issue, including case law, statutes, and policy arguments. Finally, this article details the effect of the law and proposes changes which will benefit both the industry and consumers.

Keywords: Insurance, agent, duty to advise, Minnesota, MN, policy, advise