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Dismissal of negligence charge against broker upheld

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An insurance broker provided ample warning to a trucking firm of a new exclusion in its insurance policy, said an appeals court in upholding dismissal of a negligence charge filed against the brokerage.

The now-defunct trucking company, Bowling Green, Kentucky-based Atic Enterprises Inc., never disclosed to its insurance provider or government regulators that it hauled copper, according to Tuesday’s ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Atic Enterprises Inc. v. Cottingham & Butler Insurance Services Inc.

From July 2012 to July 2013, Atic had an insurance policy with Philadelphia-based Westchester Fire Insurance Co., a Chubb Ltd. unit, which was sold by an agent of Dubuque, Iowa-based Cottingham, that that did not have a copper exclusion, account to the ruling.

In July 2013, the Cottingham agent sent Atic a proposal for a new policy that included a side-by-side comparison of the proposed 2013-14 policy and the current 2012-13 policy. “The proposal showed explicitly that copper was excluded from the new policy,” said the ruling. 

In early November 2013 two loads of copper were stolen from Atic’s trucks. Atic submitted a claim, which Westchester denied, according to court papers.

Atic filed suit against Cottingham in U.S. District Court in Bowling Green, charging negligence. The District Court granted the broker summary judgment dismissing the case, and Atic appealed. Westchester was named as defendant in the original complaint, but was not named in the appeal.

A three-judge panel unanimously upheld the District Court ruling on appeal.

“Atic never made any clear requests for advice on its insurance coverage relating to transporting copper, said the ruling. “In fact, Atic never even disclosed to Cottingham & Butler that it transported copper.”

“Cottingham & Butler provided ample additional notice of the policy change prior to the issuance of the new policy, and it did so despite not being required to provide such notice,” said the appeals panel, in upholding the lower court ruling.