Tuesday, September 15, 2020
Court of Appeal:
By a MetNews Staff Writer
An insurer could be liable for a loss not actually covered by its policy if the insured can show that the company held itself out as having expertise as to a particular type of insurance, thus assuming a heightened duty of care, and failed to explain the limitations of the protection, Div. Three of the Fourth District Court of Appeal held yesterday.
Defendant UPS Capital Insurance Agency, a wholly owned subsidiary of United Postal Service (“UPS”), disclaimed liability to plaintiff David Murray, who used UPS to ship $36,666.85 worth of computer equipment to Texas. Through negligence on the part of UPS, the equipment was damaged.
UPS had a $100 limit on liability for a customer’s loss, unless a particular value of the content of packages were set, in which event there would be a higher shipping cost. A UPS agent advised Murray not to set a higher value but to get a policy from UPS Capital.
He did, paying $350 for “house policy coverage.” There was no explanation provided to him that the policy only covered the “catastrophic” loss of all cargo.
Based on a policy exclusion, Orange Superior Court Judge Gregory H. Lewis awarded summary judgment to UPS Capital. In her opinion reversing and remanding, Presiding Justice Kathleen E. O’Leary pointed to the 1997 Court of Appeal decision by the First District’s Div. Two in Fitzpatrick v. Hayes.
There, it was said that “the agent assumes an additional duty by either express agreement or by ‘holding himself out’ as having expertise in a given field of insurance being sought by the insured.”
There is a triable issue of fact, O’Leary declared, “as to whether UPS Capital was holding itself out as having expertise in a specialized area of insurance, and therefore, assumed a heightened duty of care,” entailing a duty to explain its policy to Murray.
No Definitive Definition
“We found no case law specifically defining the phrase ‘holding themselves out as having expertise.’ ”
She noted, however, that UPS Capital offered only one type of policy to one-time shippers, and UPS represented its subsidiary to be the “go-to” broker for shipping needs such as Murray’s. The jurist also observed:
“…UPS Capital offered UPS shippers its one ‘house’ policy that was anything but understandable, especially to a one-time customer unfamiliar with marine transport insurance. The crucial provision explaining coverage is contained in a single, lengthy, 95-word sentence. While the clause used ordinary sounding words, the scope of coverage is impossible to decipher.”
Examining public policy, she said:
“As our society has evolved, the insurance industry has become more sophisticated and developed highly specialized policies, such as insuring body parts, e.g., Lloyd’s insured actress America Ferrera’s smile for $10 million. There are countless industries that require specialized insurance coverage, and to meet these ever-changing needs, agents/brokers have developed expertise and skill sets tailored to their particular specialty.”
Whatever protections are afforded, by public policy, to “general insurance brokers” against expanding their duties, O’Leary remarked, that should not apply to the “emerging group of highly specialized insurance brokers/agents,” declaring:
“[W]e conclude evidence of specialization at a minimum creates a presumption the agent/broker anticipates their clients will rely on their acknowledged expertise and supports courts imposing an extended duty.”
The case is Murray v. UPS Capital Insurance Agency, 2020 S.O.S. 4461.
Counsel for Murray was Woodland Hills attorney Miles L. Kavaller. Michael S. McDaniel, Christoph M. Wahner, and Mark P. Estrella of Law Offices of Countryman & McDaniel of Los Angeles represented UPS Capital.
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