Insured’s Claim Against Broker for Securing Inadequate Limits Fails

    The California Superior Court granted the agent's demurrer to dismiss the insured's claim for inadequate coverage. Westchester Playa Realty Alliance, Inc. v. City Roofing, Inc., 2025 Cal. Super. LEXIS 26902 (Cal. Super. Ct. June 4, 2015).

    Westchester Playa Realty Alliance, Inc. leased property in Los Angeles. City Roofing, Inc. performed repairs on the roof of the building. The building caught fire, allegedly caused by City Roofing's repairs. The fire destroyed the building and Westchester's personal property inside. 

    Westchester then discovered the property was under-insured despite hiring defendant Brown & Brown Insurance Services of California, Inc. to purchase "appropriate" coverage with "sufficient limits" for Westchester's business. However, Brown only purchased a policy with limits of $70,362, which was inadequate for Westchester's property losses. 

    Westchester filed suit alleging negligence and breach of contract against Brown. Brown demurred because Westchester failed to allege sufficient facts to constitute a cause of action and/or the pleading was uncertain. 

    The court agreed the negligence cause of action was insufficiently pled. A broker who negligently failed to procure insurance as requested by a client was liable in tort for the resulting damages. However, the mere existence of an agency relationship imposed no duty on the broker to advise the insured on specific insurance matters. Instead, the onus was on the insured to inform the broker of the insurance he required. Insurers had no affirmative duty to advise their insured to procure particular or different kinds of coverage than they obtained.

    Here, Westchester alleged it "entrusted Brown to purchase appropriate insurance coverages with sufficient limits for its business." While Westchester alleged its losses exceeded $500,000, Brown purchased a policy with limits of $70,362, which Westchester contended were inadequate and insufficient for Westchester's property losses. The complaint identified no additional information regarding the requested for insurance coverage or what was communicated to Brown by Westchester regarding the property to be insured. The complaint was entirely devoid of facts indicating what was or what Westchester believed was "appropriate" coverage and whether this request was adequately communicated to Brown. Brown had no duty to advise Westchester as to whether Westchester's request was adequate. Therefore, Westchester failed to sufficiently plead a claim for negligence.

    The cause of action for breach of contract was also insufficiently pled. Westchester failed to sufficiently allege the existence of an enforceable contract between the parties, as well as the parties' respective rights and duties under the policy. Again, plaintiff's allegations with respect to Brown's obligation to procure "appropriate" coverage with "sufficient limits' was vague, and failed to identify what Westchester specifically requested from Brown. 

    Therefore, Brown's demurrer to both causes of action was sustained with leave to amend.