Pacific Rim v. Aon: Insurance Broker Has No Duty to Inform Subcontractor of Developer’s Insurnace Company’s Insolvency

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[author: Mark Hancock]

The California Court of Appeal recently handed down a significant published decision pertaining to the duty of an insurance broker who procures a policy for the the developer of a construction project.  The Fourth Appellate District, Division One, wrote:

"In this case we are presented with an issue of first impression in California: Does an insurance broker, after procuring a policy of insurance for a developer on a construction project, owe a duty to apprise a subcontractor that was later added as an insured under that policy of the insurance company’s subsequent insolvency?  We conclude that, absent the assumption of a contractual duty to do so, insurance brokers owe no such duty."

The decision is Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Insurance Services West, Inc.,  203 Cal. App. 4th 1278.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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