Hunton Insurance Recovery Blog

From insurance agents and wholesalers to risk consultants and policyholders, there are many parties involved in commercial insurance transactions. While each has an important part to play, the policyholder-agent relationship is particularly important to ensure both sides understand their respective roles and obligations when an agent assists in obtaining coverage.

The Second Circuit Court of Appeals recently provided important guidance under New York law about the scope of an insurance agent’s responsibilities, particularly when an agent, at a policyholder’s request, expressly takes on tasks beyond simply procuring coverage. The decision underscores that an agent’s obligations can extend beyond standard procurement duties by express agreement, though the outcome could differ under the law of another jurisdiction.

The Second Circuit Finds That an Agent’s Basic Duties Can Be Expanded

In Paro Management Inc. and J&N Realty Associates LLC v. Willis of New Jersey, No. 25-872-CV, (2d Cir. Nov. 5, 2025), former tenants brought a lawsuit against a property owner and manager alleging lead-paint exposure. The policyholder alleged that it instructed its insurance agent to notify a liability insurer of the lead-paint lawsuit and that the agent expressly agreed to do so but failed to follow through. The insurer denied coverage based on untimely notice.

The policyholder sued its agent in New York federal court for negligence and negligent misrepresentation. The district court dismissed the complaint as unripe and, alternatively, for failing to state a claim against the agent. But the Second Circuit reversed the dismissal of the negligence claim, providing important guidance on an agent’s duties to a policyholder.

The Second Circuit reaffirmed that under New York law, like many other states, insurance agents generally owe a limited “order-taker” duty to procure the insurance coverage requested by the insured. An agent, the court explained, “generally owes the insured no more than the common-law duty to procure the insurance coverage that the insured requests.” In practice, that means an agent’s responsibility to the policyholder generally starts and ends with obtaining the coverage that the policyholder instructs it to obtain.

The court, however, explained that an agent’s basic duties can expand based on the circumstances, including where the policyholder requests a specific task and the agent expressly agrees to perform that task. Because the policyholder alleged that it instructed the agent to provide a lead-paint notice to the insurer, and the agent agreed, the court held that the allegations were sufficient to state a claim for negligence.

In doing so, the court rejected the agent’s argument that the policyholder had to allege a “routine course of business.” Even a one-time agreement can create an enforceable duty; an agent need not regularly perform the task to be held accountable when it expressly agreed to do so.

Key Takeaways

Insurance agents’ duties can be expanded beyond simply procuring coverage requested by a policyholder. When a policyholder requests that the agent perform a specific task, such as notifying an insurer of a claim, and the agent expressly agrees, the agent may be held to a duty of reasonable care in performing the task.

Setting clear expectations and maintaining ongoing communication and documentation are critical, as additional responsibilities can be created by a one-time request where the agent expressly acquiesces. These complexities are compounded because the answer to whether an agent acted appropriately under a particular set of facts can vary materially across jurisdictions. Being proactive and consulting with experienced legal counsel when necessary can help navigate these issues and avoid mismatched expectations or obligations that can lead to future disputes.