Can an Insured’s Failure to Read the Policy Be an Absolute Defense to a Negligence Action Brought Against an Agent?

Originally published by Kenneth Kan.

In my previous blog, I discussed whether an insurance agent’s negligence can be imputed to the insurance company that issued the policy. I referenced a case entitled Desai v. Farmer Insurance Exchange,1 where the insured filed suit against the agent and the insurer when he realized that after a loss he did not have the level of coverage he requested. A reader astutely pointed out that the suit could have possibly been avoided had the insured or policyholder read (and understood) the policy declarations and coverages prior to the loss and was able to have any problems rectified. That begs the question: Can an insurance agent assert that an insured’s failure to read the policy as an absolute defense to a negligence claim?
In most jurisdictions, including California, the answer is no. In Williams v. Hilb, Rogal & Hobbs Insurance Services of California, Inc., the court held that an insured’s failure to read his policy of insurance did not preclude a negligence action against his agent…

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