CACI No. 2307. Insurance Agency Relationship Disputed

Judicial Council of California Civil Jury Instructions (2023 edition)

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2307.Insurance Agency Relationship Disputed
[Name of plaintiff] claims that [name of agent] was [name of defendant]’s
agent and that [name of defendant] is therefore [responsible for/bound by]
[name of agent]’s [conduct/ representations].
If [name of plaintiff] proves that [name of defendant] gave [name of agent]
the [authority/apparent authority] to act on behalf of [name of defendant],
then [name of agent] was [name of defendant]’s agent. This authority may
be shown by words or may be implied by the parties’ conduct. This
authority cannot be shown by the words of [name of agent] alone.
[In some circumstances, an individual can be the agent of both the
insured and the insurance company. [Name of plaintiff] claims that [name
of agent] was [[name of defendant]/[name of plaintiff]]’s agent for the
purpose of [describe limited agency; e.g., “collecting insurance payments”]
and therefore [describe dispute; e.g., “the insurer received plaintiff’s
payment”]. [Name of defendant] claims that [name of agent] was [[name of
defendant]/[name of plaintiff]]’s agent for the purpose of [describe limited
agency] and therefore [describe dispute].]
New September 2003
Directions for Use
The instructions in this series assume the plaintiff is the insured and the defendant is
the insurer. The party designations may be changed if appropriate to the facts of the
This instruction must be modified based on the evidence presented and theories of
liability in the case. The distinction between an agent and a broker relationship may
be crucial in determining, for example, whether an insurance salesperson’s
representations bind the insurer, or whether the insurance salesperson has assumed a
specific duty to the insured.
If ostensible agency is an issue, the court may modify and give CACI No. 3709,
Ostensible Agent, in the Vicarious Responsibility series.
Sources and Authority
“Insurance Agent” Defined. Insurance Code section 31.
“Insurance Broker” Defined. Insurance Code section 33.
Actual or Ostensible Authority of Agent. Civil Code section 2315.
“An individual cannot act as an insurance agent in California without a valid
license issued by the commissioner of insurance. In addition to possessing a
license, an insurance agent must be authorized by an insurance carrier to transact
insurance business on the carriers behalf. This authorization must be evidenced
by a notice of agency appointment on file with the Department of Insurance. An
agent is generally not limited in the number of agency appointments that he or
she may have; thus, an agent may solicit business on behalf of a variety of
different insurance carriers, and still technically be an agent of each of those
carriers.” (Loehr v. Great Republic Insurance Co. (1990) 226 Cal.App.3d 727,
732-733 [276 Cal.Rptr. 667], internal citations omitted.)
“An agent’s primary duty is to represent the insurer in transactions with
insurance applicants and policyholders. Each company the agent represents must
file a notice of appointment with the DOI’s commissioner. Because an agent
represents the insurer, an agent’s representations to an insured regarding
coverage are treated as representations by the insurer. Generally, some hallmarks
of an insurance agent (as opposed to a broker) are licensure, notice of
appointment as an agent and the power to bind the insurer. In contrast, a
brokers primary duty is to represent the applicant/insured, and his or her actions
are not generally binding on the insurer. ‘Put quite simply, insurance brokers,
with no binding authority, are not agents of insurance companies, but are rather
independent contractors . . . .’ Of course, these labels alone are not
determinative of the relationship, and the specific facts of each transaction must
be reviewed. The general laws of agency inform any such review.” (Douglas v.
Fidelity National Ins. Co. (2014) 229 Cal.App.4th 392, 410-411 [177
Cal.Rptr.3d 271], original italics, internal citations omitted.)
“[S]tatutes defining ‘broker are not determinative of the actual relationship in a
particular case. The actual relationship is determined by what the parties do and
say, not by the name they are called.” (Maloney v. Rhode Island Insurance Co.
(1953) 115 Cal.App.2d 238, 245 [251 P.2d 1027], internal citations omitted.)
“While we note many similarities in the services performed and the monetary
functions of agents and brokers, there is a more fundamental legal distinction
between insurance agents and brokers. Put quite simply, insurance brokers, with
no binding authority, are not agents of insurance companies, but are rather
independent contractors . . . .” (Marsh & McLennan of California, Inc. v. City of
Los Angeles (1976) 62 Cal.App.3d 108, 118 [132 Cal.Rptr. 796].)
“Although an insurance broker is ordinarily the agent of the insured and not of
the insurer, he may become the agent of the insurer as well as for the insured.”
(Fraser-Yamor Agency, Inc. v. County of Del Norte (1977) 68 Cal.App.3d 201,
213 [137 Cal.Rptr. 118], internal citations omitted.)
“When the broker accepts the policy from the insurer and the premium from the
assured, he has elected to act for the insurer to deliver the policy and to collect
the premium.” (Maloney, supra, 115 Cal.App.2d at p. 244.)
“Generally speaking, a person may do by agent any act which he might do
himself. An agency is either actual or ostensible. ‘An agency is ostensible when
the principal intentionally, or by want of ordinary care, causes a third person to
believe another to be his agent who is not really employed by him.’ To establish
ostensible authority in an agent, it must be shown the principal, intentionally or
by want of ordinary care has caused or allowed a third person to believe the
agent possesses such authority.” (Preis v. American Indemnity Co. (1990) 220
Cal.App.3d 752, 761 [269 Cal.Rptr. 617], internal citations omitted.)
Secondary Sources
Croskey et al., California Practice Guide: Insurance Litigation, Ch. 2A, Agents and
Brokers, ¶¶ 2:12-2:24, 2:31-2:43 (The Rutter Group)
1 California Liability Insurance Practice: Claims & Litigation (Cont.Ed.Bar)
Determining Whether Enforceable Obligation Exists, §§ 5.4-5.8
2 California Liability Insurance Practice: Claims & Litigation (Cont.Ed.Bar) Actions
Against Agents and Brokers, §§ 29.2-29.5
2 California Insurance Law & Practice, Ch. 9, Issuance of Insurance Policies, § 9.02
(Matthew Bender)
5 California Insurance Law & Practice, Ch. 61, Operating Requirements of Agents
and Brokers, § 61.01[4] (Matthew Bender)
2 California Uninsured Motorist Law, Ch. 24, Bad Faith in Uninsured Motorist
Law, § 24.40 (Matthew Bender)
26 California Forms of Pleading and Practice, Ch. 308, Insurance, § 308.114
(Matthew Bender)
12 California Points and Authorities, Ch. 120, Insurance, §§ 120.18, 120.110,
120.170, 120.383, 120.392, 120.403 (Matthew Bender)

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