In the second type, the third party will claim some type of loss resulting from the agent's alleged failure to obtain coverage for the third party as an additional insured or loss payee.
In general, most courts are not as liberal in permitting direct actions against agents when the third party sues as an intended beneficiary claiming damage from the agent's failure to include the third party as an additional insured, loss payee or mortgagee under the policy.
As a condition of the loan, Gillan agreed to obtain fire insurance covering the secured property, and Gillan's broker obtained a policy naming the bank as a mortgage loss payee. At renewal, Gillan requested that coverage be placed through another carrier, and the broker procured a policy that did not list the bank as a mortgage loss payee.
Parness Trucking Corp.(15) recognized an action by a third party against a broker for failing to procure a policy that would have covered the third party as a named loss payee.
Instead, it looked to whether the plaintiff would have had any interest under the policy that should have been procured, and it concluded that under New Jersey law a broker owes a duty to avoid damage to "persons within the foreseeable zone of hazard created by its activity." Finding the third party was within this foreseeable zone because of its status as a potential loss payee, the Impex court held that the plaintiff could assert claims against the broker.
EMAR Group Inc.(16) The court addressed the issue of whether a third party named as a loss payee could bring a direct claim against the agent for failing to place coverage with a financially solvent insurer.
The court then undertook a consideration of whether the broker owed any duty to the loss payee, stating that the question was one largely of fairness and policy.
Relying in part on the reasoning of Impex, the court stated that the broker could have foreseen and prevented the harm to the loss payee because the broker should have realized that the carrier's financial problems could lead to unpaid claims presented under the policy.