Who is culpable if a homeowner’s insurance policy lapses due to an administrative error?

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Who is culpable if a homeowner’s insurance policy lapses due to an administrative error?

In 02/09 I refinanced my house. The mortgage broker sent a request for proof of insurance to my insurance agent. The insurance agent sent insurance information for the wrong person. The broker closed the loan and all information was sent to my mortgage company. The mortgage company paid the other person’s nsurance company out of my escrow so my insurance lapsed due to non-payment. I was robbed in 06/10, and when I started to do the paperwork discovered that I had not been insured for 1 1/2 years. I cringe to think if I had a fire or a hurricane event had occurred. Who is culpable here – the insurance agent or the mortgage broker? The insurance agent is pointing to the mortgage broker. Before I file a small claims action I need to make sure who is culpable.

Asked on August 29, 2010 under Real Estate Law, Florida

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

First and foremost, make sure that the coverage issue has been resolved.  Then I am going to tell you that you should sue both of them and then sit back and let them fight it out, so to speak.  Well, not really, as you have to prove your case.  But they have the documents necessary to help prove it: who did what and when, so they both need to be involved.  They should have what is known as "E & O" coverage - errors and omissions coverage, and their insurance companies will send an attorney to represent them.  You need to make sure that you can ask for discovery of certain document s within their control if you do not have them.  Discovery is not usually permitted in a small claims setting.  But you may be able to list it on the summons and complaint.  Good luck.


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