NH Supreme finds “special relationship”, confirms jury award against insurance agency

A split New Hampshire Supreme Court decision released Friday offers insurance agents a lesson in the importance of checklists.

Three justices overturned two dissenters to uphold a Superior Court jury verdict that Foy Insurance Group was negligent for failing to advise a hotel owner to purchase sufficient insurance to rebuild before his property was seriously damaged by fire in 2015.

The plaintiff, 101 Ocean Blvd. LLC, argued that using a simple checklist would have revealed that the $ 10,000 limit on law and ordinance costs was not sufficient coverage for a building constructed in the 1920s with an aggregate policy limit of $ 2 million.

Jean Cronin

“Use your voice and tell the insurance industry not to sell these policies as replacement costs if they contain coinsurance,” plaintiff’s lawyer John G. Cronin told the jury in closing arguments. . “Tell them not to sell them as a replacement price if they don’t provide adequate coverage for the law and ordinance. “

Foy appealed the verdict on the grounds that Cronin’s final statements were prejudicial and that the jury instructions and the verdict form were flawed. Defense attorney also said the court erroneously admitted as evidence a checklist that some officers use to ensure properties have adequate coverage.

Two judges agreed with some of these points, but the majority decided to uphold the jury’s judgment.

“While we do not endorse the disputed portions of Ocean’s final argument, in the circumstances of this case, we cannot conclude that the failure of the trial court to halt the closure of Ocean and / or to immediately provide further instructions amounted to a simple error which affected Foy’s substantive rights. , says the majority opinion.

Albert J. Bellemore Jr. has relied on Foy, an agency with multiple New Hampshire offices, to find insurance for his properties since the early 2000s, according to the opinion. After he bought the hotel on Ocean Boulevard, he bought a million dollar blanket for the building.

In 2011, Agent Heidi SansSouci urged him to increase that coverage to $ 2 million. Bellemore initially refused due to the recession, but in 2013 he took SanSouci’s advice and purchased a $ 2 million policy from Lloyd’s of London. The insurer refused to renew the policy, so Bellemore bought a $ 2 million policy with AIX Specialty Insurance Co., a unit of The Hanover.

Bellemore testified that he relied on the advice of the Foy Agency in matters of insurance. However, he did not purchase flood or alcohol liability insurance when SanSouci suggested it. The statute and ordinance limit, however, remained at $ 10,000.

After the hotel was badly damaged in the 2015 fire, Bellemore hired an engineering company and found it would cost around $ 1.1 million to rebuild, but an additional $ 905,070 to rebuild. comply with the current building code. He decided to demolish the structure instead of rebuilding it. AIX paid $ 910,141.

Bellemore’s company sued Foy for the difference. A Hillsborough County jury found that Foy was indeed negligent and responsible for 75% of the fault. The notice does not specify the amount of damages awarded.

Reached by phone on Friday, Cronin said he made no apologies for his “passionate” pleadings. He said Bellemore is not a large-scale developer, he is a “working man” who makes a living by buying properties and renovating them.

Cronin said that while researching the case, he learned that some agents use a checklist to make sure a property’s coverage is adequate. He said they aren’t needed, but a checklist would certainly have been helpful in Bellemore’s situation.

He said that in 2002 the New Hampshire Supreme Court ruled in Sintros v. Harmon that while policyholders have a “special relationship” with their insurance agents, the agent has a duty to provide advice on the availability or sufficiency of insurance coverage.

The Supreme Court opinion says that the existence of a special relationship is decided on a case-by-case basis, but can usually be established by showing that both parties understood that the policyholder was relying on the agent to obtain advice on coverage decisions.

Cronin said his client was certainly relying on SanSouci for sound advice. He said an expert said at trial that for just $ 500, Ocean’s policy could have been structured to provide $ 700,000 to $ 900,000 in additional legal and regulatory coverage, but with a cost limit. lower replacement. This would provide the full $ 2 million coverage that Bellemore thought it would buy, he said.

“How insurance is sold and delivered, it’s not like you can go out there and open the hood and kick the tires. You go to the office and someone tells you to fill out a form, they give you a binder and six weeks later you get a thick envelope in the mail and you are supposed to read and understand it.

The two dissenters wrote in their separate decision that they would have overturned the jury’s verdict because the hotel owner had failed to show damage. While a higher policy limit for law and ordinance chances may have resolved the issue, no evidence has been presented to show that such coverage was actually available, they said.

About photo: Hampton Beach State Park in Hampton, New Hampshire, seen October 3, 2020.

CORRECTION: An earlier version of this story incorrectly stated that Bellemore had purchased alcohol liability insurance. He didn’t buy that blanket, according to Jeffrey Foy, chief operating officer and agency director.

About Jessica J. Bass

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