Cleveland Indians baseball club wins rare negligence claim against insurance broker
In 2010, the Cleveland Indians turned to inflatable play structures to draw fans to the ballgame. They enlisted the help of an event arranger to supply the structures and to purchase liability insurance. The arranger secured insurance through New Hampshire Insurance Company with the assistance of a broker, CSI Insurance Group. This turned out to be a good idea when an inflatable slide collapsed on two patrons, killing one. When the ballclub was sued, however, the insurer denied coverage and pointed to a specific exclusion applicable to inflatable play structures.
The ball club sue the insurer and the broker in Michigan's Eastern District Federal Court and the judge summarily dismissed both claims. It held that the insurer had never assumed a duty to cover the risk of inflatable structures and that under insurance-friendly Michigan law, the agent broker owed no duty to the Indians. The club appealed.The Sixth Circuit appellate court affirmed the holding with regard to the insurer but overturned it with regard to the agent broker. The Court pointed out that the broker had assumed a clear duty to provide coverage for this precise risk and then had negligently fulfilled its duty. Under the circumstances it refused to follow the Michigan Supreme Court precedent cited by the insurance broker, concluding that having undertaken the duty to bind coverage for this incident, the agent could be held accountable for negligently failing to do so.
It doesn't hurt when the wrongfully denied insured can point to an email by the defendant where the defendant admits "Oh. Okay. I guess I missed it."