Insurance and Agent's Duty of Care


Somnus Mattress Corp. v. Hilson, [Ms. 1170250, Dec. 21, 2018] __ So. 3d __ (Ala. 2018) (Mendheim, J.; and Stuart, C.J.; and Parker, Main, and Bryan, JJ., concur). The Court affirms an entry of a summary judgment by the Winston Circuit Court in favor of Stephen Hilson and Crutchfield & Graves Insurance Agency on Somnus's claim that Hilson and the agency were negligent in advising Somnus not to purchase insurance coverage for business interruption and loss of profits.

The Court first concludes Somnus failed to rebut Hilson's and the insurance agency's Ala. R. Civ. P. 56(c)(3) prima facie showing that there was no genuine issue of material fact when Somnus's principal, Jones, conceded he could not recall the representations made to him about the necessity for such business income and profits coverage in the time leading up to Somnus's acquisition of the policy in question. The Court holds (Ms. *13-14) "[n]ot remembering a conversation does not constitute evidence indicating that what the opposing party contends was relayed in that conversation did not occur." Quoting Giles v. Brookwood Health Services, Inc., 5 So. 3d 533, 554 (Ala. 2008), the Court reiterates ... [an] inability to recall [ ] conversations does not constitute substantial evidence that the conversations did not occur, only that [one] cannot remember whether they occurred or what [was] discussed." Id.

Second, reviewing caselaw from Alabama and other jurisdictions, the Court finds no duty on the part of the insurance agent or his agency voluntarily undertaken to give advice regarding the availability or sufficiency of coverage. The Court concludes:

Indeed, we have been unable to find any Alabama authority holding that an insurer may voluntarily assume a duty to advise a client regarding the adequacy of the client's insurance coverage. Moreover, to the extent that courts in other jurisdictions have concluded that such a duty can be voluntarily assumed, they have done so only in instances in which the insurer misrepresented information the client could not have known from reading the insurance policy or in which a "special relationship" existed.

Ms. *22.

Because Somnus failed to present substantial evidence creating a genuine issue of material fact as to the advice the agent gave to Jones in the year before its purchase of its business policy, and because it also failed to establish that the agent or his agency voluntarily assumed a duty to advise Somnus concerning the adequacy of its insurance coverage, the circuit court's summary judgment in favor of the agent and agency were due to be affirmed.

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