Appellate Court Permits Contractor's Claim Against Insurance Broker for Failure to Procure Adequate Coverage

The procurement of adequate insurance is important in any industry, and the construction industry is no different. However, insurance is different than many of the goods and services a construction contractor procures because insurance is not tangible good but, rather, a contractual promise to make good for losses that the contractor may incur. Often times, it is only after a liability has been incurred (and it’s too late) that a contractor will realize that the insurance it has procured was not sufficient. In such situations, the contractor often tries to look to the insurance broker who did not procure the adequate coverage to make things right after the fact and cover the loss for the contractor (often, with the broker’s own insurance policy). In the recent case of Gibraltar Contracting, Inc. v Northeast Brokerage, Inc., an appellate court reminds us that such claims against insurance brokers are limited to situations where the broker fails to procure coverage that was specifically requested by the Contractor, but not procured by the Broker.

If you would like more information regarding this topic please contact Thomas H. Welby at twelby@wbgllp.com or call (914) 428-2100