Retail Brokers Duty to Exercise Reasonable Care in New York
In Abetta Boiler Welding Service, Inc. v. American Intern. Specialty Lines Ins. Co., 76 A.D.3d 412, 906 N.Y.S.2d 540, [1st Dept, 2010], the First Department found a special relationship existed between the retail broker and Abetta Boiler & Welding Service, Inc. ("Abetta") that imposed a duty on the retail broker to "exercise reasonable care in notifying the appropriate primary or excess insurer of any claim reported to it" by Abetta.
In that case, there was evidence that "as a matter of routine Abetta referred all questions regarding its insurance claims to [the retail broker] and [the retail broker] handled all of Abetta's insurance needs, including referring its claims to insurers". Id at 413.
It was further determined that the retail broker breached its duty to Abetta because it failed to follow up with either the wholesale broker or the insurance carrier to "ascertain that the excess carrier actually received notice of the claim and the action." Id at 413.