J. Smith Lanier & Co. v. Southeastern Forge, Inc., 280 Ga. 508

630 S.E.2d 404 (2006) · Supreme Court of Georgia · May 17, 2006 · No. No. S05G1336

Summary

The Supreme Court of Georgia held that an insurance broker's liability for negligently failing to procure agreed insurance coverage is limited to the liability limits of the policy the broker agreed to obtain. The court rejected applying statutory bad-faith insurer liability principles to an independent broker, reversed the Court of Appeals to the extent it allowed damages exceeding those limits, and held that damages for breach of the procurement agreement could not exceed $2 million.

Holdings

  1. If an insurance broker is found to have breached a contract to obtain insurance coverage, the broker's liability is limited to the liability limits of the policy the broker agreed to procure; the broker cannot be held liable for damages exceeding those limits.
  2. The statutory bad-faith duties and penalties applicable to insurers do not impose liability beyond policy limits on an independent insurance broker that does not issue the insurance contract.

Questions Presented

  1. Whether an insurance broker who breaches an agreement to procure insurance may be held liable for damages exceeding the liability limits of the policy the broker agreed to procure.
  2. Whether statutory bad-faith duties and damages applicable to insurers support imposing liability beyond the agreed policy limits on an independent insurance broker.

Disposition

reversed

Cases Cited (21)

  • J. Smith Lanier & Co. v. Acceptance Indem. Ins. Co., 272 Ga. App. 789, 612 S.E.2d 843 (2005)(reversed in part)
  • Acceptance Indem. Ins. Co. v. Southeastern Forge, 209 F.R.D. 697 (M.D. Ga. 2002)(followed as procedural history)
  • Beiter v. Decatur Federal Savings, etc., 222 Ga. 516, 518(2), 150 S.E.2d 687 (1966)(followed)
  • Minter v. Georgia Piggly-Wiggly Co., 185 Ga. 116, 194 S.E. 176 (1937)(followed)
  • Elam v. Smithdeal Realty, etc., Co., 182 N.C. 599, 109 S.E. 632, 633 (1921)(followed as rationale)
  • Cotton States Mut. Ins. Co. v. Brightman, 276 Ga. 683, 580 S.E.2d 519 (2003)(distinguished)
  • McCall v. Allstate Ins. Co., 251 Ga. 869, 310 S.E.2d 513 (1984)(distinguished)
  • Spicer v. American Home Assur. Co., 292 F. Supp. 27, 33 (N.D. Ga. 1967)(followed)
  • McGhee v. Kroger Co., 150 Ga. App. 291(2), 257 S.E.2d 361 (1979)(followed)
  • Owens v. Allstate Ins. Co., 216 Ga. App. 650(1), 455 S.E.2d 368 (1995)(followed)

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