Bill Text: MI HB4520 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Torts; liability; insurance agents; establish standard of care for liability. Creates new act.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-05-01 - Bill Electronically Reproduced 05/01/2019 [HB4520 Detail]
Download: Michigan-2019-HB4520-Introduced.html
HOUSE BILL No. 4520
April 30, 2019, Introduced by Rep. Rendon and referred to the Committee on Insurance.
A bill to provide for and clarify the liability of and
simplify claims and actions against insurance agents and agencies.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"insurance agents standard of care act".
Sec. 2. As used in this act:
(a) "Customer" means a person that has engaged a licensee or
requested that the licensee place, procure, or service insurance
coverage on the person's behalf and includes any other person that
is requested to be included as or that is a named insured on the
coverage. Customer does not include any of the following:
(i) Any other person that may be included in the coverage or
in a policy issued as an additional insured, loss payee, mortgagee,
land contract holder, or lien holder.
(ii) Any other person that may benefit from the coverage as a
beneficiary or insured person.
(iii) Any other person that may have suffered or is alleged to
have suffered loss, damage, or injury that may be recoverable under
the coverage or a policy issued.
(b) "Insurance agent errors and omissions liability" means the
cause of action described in section 4(1).
(c) "Insurance counselor" means an individual who is licensed
as an insurance counselor under section 1234 of the insurance code
of 1956, 1956 PA 218, MCL 500.1234.
(d) "Licensee" means an insurance producer, as that term is
defined in section 1201 of the insurance code of 1956, 1956 PA 218,
MCL 500.1201, including an insurance agency, that is licensed under
the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302.
Licensee includes an employee of an insurance producer. Licensee
does not include an insurance counselor.
(e) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(f) "Special relationship" means a relationship between a
licensee and a customer as to which 1 or more of the following
occur:
(i) The licensee expressly undertakes additional duties or
obligations beyond exercising the standard of care to place,
attempt to place, or service the coverage requested by the customer
that is the specific issue in dispute. A licensee does not
expressly undertake an additional duty or obligation by doing
either of the following:
(A) Using a common phrase of puffery or assurance, such as
full coverage, good coverage, or you are covered.
(B) Offering options for optional or additional coverage or
limits.
(ii) The customer makes an inquiry to the licensee or asks the
licensee a question about the specific issue in dispute.
(iii) The licensee makes a representation or provides advice
or an explanation about the specific issue in dispute to the
customer. A licensee does not provide advice by offering options
for optional or additional coverage or limits.
(iv) The customer makes an ambiguous request to the licensee
that warrants clarification about the specific issue in dispute.
(g) "Special relationship" does not include a relationship
between a licensee and a customer that is based only on 1 or more
of the following:
(i) The length of a business or personal relationship between
the licensee and the customer.
(ii) The number or percentage of policies or coverages
procured or placed by the licensee for the customer.
(h) "Standard of care" means the minimum skill and care,
knowledge, and expertise possessed and exercised by licensees
placing or servicing the same or a comparable type and complexity
of coverage with the same or a comparable premium level as the
policy and coverage at issue or in dispute.
Sec. 3. (1) This act applies to a licensee with respect to
services, conduct, or actions performed in the licensee's capacity
as a licensee.
(2) This act does not apply to a licensee with respect to the
licensee's duties in the receipt or handling of money under section
1207 of the insurance code of 1956, 1956 PA 218, MCL 500.1207.
Sec. 4. (1) There is a single cause of action against a
licensee regarding services, conduct, or actions performed in the
agent's capacity as a licensee, insurance agent errors and
omissions liability.
(2) There is no cause of action against a licensee other than
the cause of action described in subsection (1), including, but not
limited to, any cause of action at common law or in equity for
negligence, breach of contract, misrepresentation, fraud, breach of
fiduciary duty, unjust enrichment, or quantum meruit, and any such
cause of action is abolished.
Sec. 5. Except as provided in section 6, if a special
relationship is established, a licensee's liability for insurance
agent errors and omissions liability is limited to breach or
violation of the standard of care for licensees to place and
service insurance policies and coverage requested by the licensee's
customers. A licensee has no duty or obligation to advise a
customer or other person about the customer's insurance needs or
requirements or to explain the coverage to a customer or other
person. Except as provided in section 1207 of the insurance code of
1956, 1956 PA 218, MCL 500.1207, a licensee is not a fiduciary and
does not have fiduciary obligations.
Sec. 6. If a special relationship is found to exist with the
customer as to the specific matter or issue that is in dispute, the
licensee shall comply with the standard of care in fulfilling the
additional duties or obligations agreed to, to clarify the
ambiguous request, to give accurate and responsive advice and
explanations, and to accurately respond to the inquiries or
questions.
Sec. 7. Unless the standard of care and breach or violation of
the standard of care is acknowledged or admitted by the licensee or
readily apparent under the facts without expert testimony, proof of
insurance agent errors and omissions liability requires expert
testimony or opinions to establish the standard of care, breach or
violation of the standard of care, and whether damages proximately
resulted from the breach or violation of the standard of care.
Sec. 8. The liability and damages of a licensee for insurance
agent errors and omissions liability as a result of breaching or
violating the standard of care is limited to the loss, damages, or
benefits that would have been recovered or received by the customer
or another person had there been no error or omission by the
licensee, plus statutory interest, and does not include other
amounts or damages such as, by way of example only, mental distress
and upset damages; loss of profits that would not have been payable
under the policy or policies procured or to be procured in the
absence of the error or omission; punitive or exemplary damages; or
any other loss or damages that would not have been covered by the
policy or policies at issue in the absence of the error or omission
of the licensee.
Sec. 9. A person shall not commence an action or arbitration
or otherwise make a claim for insurance agent errors and omissions
liability against a licensee more than 2 years after the licensee
last provided services to the customer with respect to the specific
policy or coverage at issue or more than 6 months after the date
the customer knew, discovered, or should have discovered through
the application of ordinary care that an error or omission may have
been committed.
Sec. 10. This act applies to a cause of action that arises or
an action, arbitration, or claim filed or made on or after the
effective date of this act.
