Business owners cannot sue agent after application for replacement cost coverage did not procure adequate coverage

In Lowell v. Walker Insurance Agency, the plaintiff business owner attempted to sue her independent insurance agent for breach of contract and negligence after her bowling alley burned.  She was insured for a little over $700,000.00 while the cost of replacing the structure and its contents exceeded $2,000,000.  The owner pointed to a 2010 Application for replacement coverage, alleging that it created both a contract and a duty on the part of the agent to procure more complete coverage. The agent alleged that the application resulted in advice by her to the owner that the owner needed to secure an up-dated appraisal in order to document the level of coverage to be purchased.

The Court of Appeals affirmed the trial judge's summary disposition of the claim against the owner.  The Court ruled that the only contract was to "apply" for replacement coverage, and that nothing in the Application created a special duty on the part of the agent to secure better coverage.  The Court conferred upon the "independent agent" many of the protections granted to captive agents by the Republican majority of the Michigan Supreme Court in Harts v. Farmers Ins. Exchange; it pointed to the "public policy argument" in Harts that reinforced the general no-duty-to-advise rule.  In purchasing insurance, the Court concluded that absent some special circumstance that alters the relationship, an agent--even an independent agent--owes no general duty to offer good advice.