Brokers as Agents of Insurance Companies
While driving his own car on his way to visit a customer, Michael Molda, a Metro Lift employee, was involved in a car accident with Ms. Nola Wilson. Molda had his own auto insurance but as an employee of Metrolift, he was also covered under Metrolift’s insurance policy with the plaintiff, First Chicago Insurance www.firstchicagoinsurance.com/. Metrolift purchased the insurance policy through Associated Specialty Insurance (Associated). Mark Baskiewicz, an insurance broker of 20 years and an employee of Associated, was Metrolift’s primary contact for insurance issues. Metrolift notified Mark Baskiewicz two days after the accident and both allegedly agreed to a plan in which they would “wait and see” if any complaints were filed against Metro and if Molda had sufficient insurance under his policy.
Wilson sued Molda in August 2007. Metrolift was later added as a defendant. Metrolift forwarded the amended complaint to First Chicago. First Chicago then filed for declaratory judgment and alleged it was not liable to provide insurance to Molda or Metrolift because of unreasonably late notice it only first received in March 2008. First Chicago filed for summary judgment and the motion was granted. Wilson and Molda appealed. (Metrolift was later dismissed from the Wilson’s tort case on statute of limitations ground and did not participate in the appeal).
The appellants argued that First Chicago was barred in claiming that notice was untimely because the conversation between Baskiewicz and Metrolift constituted “prompt” notice to First Chicago’s “authorized representative” per the notice provision of the insurance contract. The court stated that an insurance broker is generally considered to be the agent of the insured and not the insurance company. State Security Insurance Co. v. Burgos, 145 Ill. 2d 423, 431 (1991). However, a broker may have apparent authority to provide notice if a reasonable person would believe that the broker was an agent. Id. at 431.
Apparent authority can manifest itself through course of dealings between the broker and insurance company, if a broker is continually used as an intermediary and conduit for premium payments and policy updates, and through the language of the contract such as a designated “representative” or “agent” clauses. See Id. at 423. The court found this case similar to the facts in Burgos and held that there could be apparent authority, which would make summary judgment improper. Furthermore, because there was a question of fact as to what was discussed between Metro and Baskiewicz and whether First Chicago suffered any prejudice from the late notice, the court could not determine if the delay was unreasonable.
