On appeal from Superior Court, Law Division, Passaic County.
Matthews, Furman and Cohen.
In October 1980, plaintiff, who had recently moved to New Jersey from New York, contacted defendant Prudential Insurance Company in order to obtain automobile insurance. He was referred to insurance agent defendant Charles Redmond, with whom he subsequently met to discuss coverage. In response to Redmond's inquiry, plaintiff informed Redmond of the coverage and monetary limits provided by his policy in New York. Redmond advised plaintiff that he was required to carry Personal Injury Protection (PIP) and Uninsured-Underinsured Motorist Insurance (UMI).
Plaintiff requested $100,000/$300,000 liability coverage. Regarding additional coverage, it is not clear whether plaintiff told Redmond that he wanted to be "fully covered with whatever coverage was available" or to obtain "the New Jersey package that is the best available." In their brief, defendants acknowledge that plaintiff deposed that he requested the "best available" package regarding the rest of the insurance. Judge Alterman, however, made no finding as to which of the above two requests were made.
Without advising plaintiff that there were options available under PIP and UMI, Redmond provided plaintiff with a policy that contained a UMI liability limit of $15,000 on account of injury to or death of any one person and $30,000 on account of injury to or death of more than one person in any one accident. This satisfied the statutory minimum required under N.J.S.A. 17:28-1.1. At the time, Prudential offered UMI coverage in amounts of $100,000 and $300,000 for an additional $5 premium. Redmond was authorized to issue such coverage.
Plaintiff sustained serious injuries and permanent disabilities in a motor vehicle accident. The driver of the other vehicle,
who was allegedly at fault, maintained only the minimum $15,000/$30,000 insurance. Plaintiff instituted an action in the Law Division alleging negligence on the part of defendant Redmond in failing to advise him of the availability of the higher amounts of UMI coverage. Plaintiff sought to amend defendant Prudential's insurance policy to include UMI coverage to an amount of $100,000.
In a written opinion the Law Division judge denied cross-motions for summary judgment. Addressing the question of whether "an insurance agent has an affirmative duty to advise his client of the availability of higher monetary limits for the coverage requested," he found that such a duty exists and that defendant Redmond breached that duty owed to the plaintiff. He also identified certain unresolved issues of fact: whether defendant Redmond's breach was the proximate cause of the damages plaintiff sustained; the exact language used by plaintiff when requesting insurance from defendant Redmond, and the meaning to be given to said language.
At trial, Judge Rumana decided the proximate cause issue in favor of plaintiff and ordered the Prudential policy reformed. He found, as a fact, plaintiff would have purchased additional UMI coverage if it had been offered to him and found as a matter of law that it was not necessary for the plaintiff to show that he would have exercised the option.
The duty of care owed by an insurance broker*fn1 to a client has been set forth in Rider v. Lynch, 42 N.J. 465 (1964):
One who holds himself out to the public as an insurance broker is required to have a degree of skill and knowledge requisite to the calling. When engaged by a member of the public to obtain insurance, the law holds him to the exercise of good faith and reasonable skill, care and diligence in the execution of the commission. He is expected to possess reasonable knowledge of ...