In an issue of first impression, the Wisconsin Court of Appeals recently clarified the elements that a plaintiff must prove in negligence claims against insurance agents.
In Emer’s Camper Corral, LLC v. Michael A. Alderman, et al., (App. No. 2018AP458), plaintiff claimed that the defendant insurance agent was negligent for failing to obtain a particular policy of insurance. Plaintiff claimed that instead of procuring a policy with a $1,000 per-unit hail damage deductible and an aggregate hail damage deductible of $5,000, defendant insurance agent instead procured a policy with a $5,000 per-unit hail damage deductible and no aggregate limit. Plaintiff’s property suffered hail damage after the latter policy was procured, and claimed $120k in damages resulting from the higher deductible terms.
Affirming the circuit court’s grant of defendant insurance agent’s motion for a directed verdict, the court of appeals concluded that in order to prevail on its negligence claim, plaintiff was required to prove that the defendant insurance agent’s conduct caused plaintiff’s damages – “that is, that [defendant’s] conduct was a substantial factor in producing those damages.” ¶ 2. To so prove, plaintiff needed to prove that, but for defendant’s alleged negligence, plaintiff could have actually obtained a policy with the lower hail damage deductible, instead of the policy actually obtained. But because plaintiff failed to produce any evidence at trial that it would have been able to obtain such a policy (absent defendant’s negligence), plaintiff could not establish, as a matter of law, that defendant’s conduct was a cause of its damages.
In reaching this conclusion, the court of appeals first looked to and followed basic Wisconsin negligence law on causation. (¶ 18.) But noting that this was an issue of first impression in the insurance agent context, the court also concluded that Minnesota law on the issue (¶ 19), along with Wisconsin and Kansas law on unreasonable delays in rejecting an insurance application (¶¶ 20-24), supported its ruling.
While an issue of first impression, the ruling in this case appears to be in line with traditional concepts of causation in professional liability negligence cases – if the desired result was actually unavailable to the plaintiff, then the defendant’s alleged failures (whatever they may be) cannot be said to have caused the harm alleged. Practitioners handling the defense of these claims should be keenly aware of this, and develop strategies that challenge this key causation element.