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State Appeals Court Backs Ripon Insurance Agent
By Kevin Murphy
Special to The Reporter
MADISON — It's not enough to ask your insurance agent to increase your coverage, he must agree to do so if you want to collect on a claim, a state appeals court ruled Wednesday in a Fond du Lac County case.
In reversing Circuit Judge Dale English's ruling, the District 2 Court of Appeals concluded that Ripon insurance agent Drew Diedrich wasn't obligated to cover the fire loss in excess of the $150,000 policy he had sold to Thomas and Mary Avery, despite the Averys asking Diedrich to increase their policy limits to $250,000.
The Averys, of Ripon, inherited a house in Green Lake from Mary's father, in 2002. The house was insured for $150,000 by Auto-Owners Insurance through The Diedrich Agency Inc.
Months later, Thomas Avery asked Diedrich to increase the home's coverage to $250,000, but Diedrich declined, saying that a $100,000 increase on a $150,000 property would appear suspicious.
The Averys later obtained a verbal assessment from a contractor but never communicated it to Diedrich, and Diedrich didn't obtain additional fire insurance coverage for them.
When the property burned on Sept. 6, 2002, the replacement cost exceeded $250,000, and the Averys sued Diedrich for allegedly failing to increase their coverage.
In ruling for the Averys, English found that the insured determines how much coverage he needs and that an insurance agent is bound to obtain the coverage a client requests, not the just the coverage the agent agrees to procure.
Diedrich appealed, and the District 2 court ruled that Diedrich didn't have a duty to provide additional coverage to the Averys merely because they asked. Diedrich agreed to provide a $150,000 policy but there was no evidence that he agreed to provide the $250,000 policy, according to the decision.
"Incurring new coverage was an additional task, and the Averys could not unilaterally impose it on Diedrich,"Judge Richard Brown wrote in the 10-page opinion.
"Diedrich did not agree to perform this new task and wasn't obligated to perform it," he said.
"A case law imposes a duty on agents to respond in good faith to customer requests, but not every request will result in obtaining coverage for a client, Brown wrote.
Calls to the attorneys for Avery and Diedrich weren't returned before deadline.
The appeals court asked a courts review committee to publish the decision so it could be used as precedent.
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