It is easy for an insurance broker to view its liability to only its known clients. While that view makes sense from a business prospective, in the world of insurance litigation where a plaintiff is always looking for a source of compensation, brokers remain a likely target when things go awry. This article addresses an area of insurance broker liability to strangers to the policyholder-broker relationship.
The case of Business to Business Markets, Inc. v. Zurich Specialties provides a stark example of how an insurance broker can be left on the hook when an insurer denies coverage. In this matter, Business to Business Markets (“B2B”) contracted with an Indian company, Tricon Infotech, to create custom software for it. Part of the agreement required Tricon to obtain errors and omissions coverage to compensate B2B if Tricon failed to deliver.