Purchasing Higher Deductibles Than Desired Is Not Broker Negligence
Barry Zalma | April 12, 2019
The plaintiff in Emer's Camper Corral LLC v. Alderman, 2019 Wisc. App. LEXIS 151 (March 19, 2019), was a very unlucky business that suffered multiple sets of hail damage to its stock of campers and recreational vehicles. Camper Corral alleged that Alderman, its insurance agent, breached his duty by procuring a policy for Camper Corral that contained a $5,000 per-unit deductible for hail damage claims instead of a policy with a $1,000 per-unit hail damage deductible and an aggregate hail damage deductible of $5,000.
The case proceeded to a jury trial, and the circuit court ultimately granted Alderman's motion for a directed verdict on two grounds: (1) Camper Corral failed to present an expert witness to testify regarding the standard of care, and (2) Camper Corral failed to establish that Alderman's alleged negligence caused its damages.
Background of the Case
Camper Corral is a business that sells new and used campers. In May 2011, Camper Corral's inventory sustained approximately $100,000 in damage during a hailstorm. Camper Corral made a claim, and General Casualty paid the claim.
In the summer of 2012, Camper Corral's inventory again sustained approximately $100,000 in hail damage. Camper Corral submitted a claim to General Casualty for that damage, which General Casualty paid. Twice bitten, General Casualty subsequently provided Camper Corral with a notice of nonrenewal of its policy.
Alderman searched the insurance market and contacted Emer to inform her that Western Heritage Insurance Company was willing to insure Camper Corral's inventory but with a hail damage deductible of $5,000 per unit. Emer agreed to accept that policy.
Emer testified that Alderman called her in August 2013 and informed her that Western Heritage had agreed to renew Camper Corral's policy for the 2013–2014 policy year with a hail damage deductible of $1,000 per unit, capped at $5,000 total. Emer agreed to accept the renewed policy on those terms.
Emer testified that she first received a copy of Camper Corral's 2013–2014 policy after the September 3, 2014, hailstorm. She subsequently learned that the policy actually included a hail damage deductible of $5,000 per unit, rather than $1,000 per unit, and it did not include an aggregate hail damage deductible. Emer testified 25 campers were damaged during the September 2014 storm, and the total deductible, therefore, amounted to $125,000. After subtracting that amount from Camper Corral's recovery, Western Heritage ultimately paid Camper Corral approximately $65,000.
Camper Corral, unhappy with the deductible-caused shortfall, sued the broker, asserting a single claim against Alderman for negligence, because he "knew that [Camper Corral] wanted insurance coverage without a $5,000 hail deductible."
The case then proceeded to a jury trial. Alderman moved for a directed verdict challenging the sufficiency of the evidence. The circuit court agreed with Alderman and granted a directed verdict in his favor. Plaintiffs can succeed only if they are able to show that they would have been protected from the damages by an insurance policy that could have been purchased in the insurance market at the time the alleged breach occurred.
The court concluded that Camper Corral had presented no evidence demonstrating that, absent Alderman's alleged negligence, Camper Corral would have been able to obtain a policy containing a hail damage deductible less than $5,000 per unit for the coverage period at issue. The court, therefore, dismissed Camper Corral's negligence claim against Alderman, and Camper Corral appealed.
Analysis of the Case
Camper Corral failed to introduce expert testimony regarding the standard of care or any evidence that there was coverage availed to it in the insurance marketplace with the deductibles wanted. A negligence claim requires a plaintiff to establish four elements: (1) the existence of a duty of care on the part of the defendant, (2) a breach of that duty of care, (3) a causal connection between the defendant's breach and the plaintiff's injury, and (4) actual loss or damage resulting from the injury.
The circuit court concluded Alderman was entitled to a directed verdict on Camper Corral's negligence claim because Camper Corral had failed to prove that Alderman's conduct caused its damages. In addition, the circuit court concluded there was no evidence in the trial record to support a finding that, absent Alderman's alleged negligence, Camper Corral would have been able to obtain a policy containing a hail damage deductible less than $5,000 per unit. Without such evidence, the court concluded Camper Corral could not prove that Alderman's conduct in failing to obtain a policy with a lower deductible caused Camper Corral to sustain any damages.
The test for determining causation is whether the conduct at issue was a substantial factor in producing the plaintiff's injury. Here, Camper Corral's alleged injury was that its total deductible for the September 2014 hail damage claim was significantly higher than what Camper Corral anticipated. If Camper Corral could not have done so, then Alderson's conduct had no effect on the ultimate amount of Camper Corral's deductible for the September 2014 claim and, consequently, was not a substantial factor in producing that result.
Camper Corral's complaint alleged a single cause of action against Alderman for negligence. Camper Corral never filed an amended complaint asserting additional claims for breach of contract or strict responsibility misrepresentation. To prevail on its negligence claim, Camper Corral was required to establish that, absent Alderman's alleged negligence, it would have been able to obtain an insurance policy containing a hail damage deductible of less than $5,000 per unit for the coverage period at issue. The circuit court reasonably concluded there was no credible evidence at trial to support a finding that Camper Corral could have obtained such a policy.
Conclusion
This is another failure to read a policy as written, a failure to communicate with the insurance agent/broker, and a failure to present sufficient evidence to prove the cause of action. One could only assume that any expert insurance agent or broker asked to testify would, if called, have testified that, after two major hail losses in a short period of time, no prudent insurer would have taken on the risk posed by Camper Corral without a high per unit deductible. As my dearly departed father would always say: "You only get what you pay for."
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