Secrest Wardle Convinces Court of Appeals to Say No to Secret Agents, Yes to Rescission

“[W]hen an insurance policy is facilitated by an independent insurance agent or broker, the independent insurance agent or broker is considered an agent of the insured rather than an agent of the insurer.” Al-Hajjaj v Hartford Accident and Indem Co, ___ Mich App ___ (2023) (Docket No. 359291); slip op at 4.

A 2018 amendment to MCL 500.1201 did not alter this common-law rule. Rather, the amendment addressed “a narrow, specific” situation: “where the consumer (insured) and insurance company (insurer) each have their own agent, and these two agents in turn have a written contractual relationship with each other.” Al-Hajjaj, ___ Mich App at ___; slip op at 7.

“[A] standard contract between an insurance company and an independent-insurance agent” likewise does not mean that an agency owes its “primary fiduciary duty” to the carrier. Id. at ___; slip op at 7-8.

In this published decision, the agency’s contract with Harford authorized it to “solicit, quote and bind insurance” on behalf of Hartford, but the contract also “materially limited [the agency’]s authority,” while recognizing that the agency “had the right to select and place insurance policies with other insurers.” Id. at ___; slip op at 8.

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