Reasoning that the broker owed a duty to "those for whose protection the insurance was procured," including loss payees, the court held that the broker could be liable to the loss payee.
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.
9) However, as is discussed below, New Jersey courts have recognized the right of a loss payee or additional insured to pursue a direct action against an agent for a claim sounding in negligence and not in contract.
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.
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.
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.