Atlanta Women's Club, Inc. v. Washburne

Beasley, Judge.

The Atlanta Women’s Club, Inc. sued Washburne and the insurance agencies for which he worked, alleging that they negligently failed to procure insurance coverage and breached a contract to procure such coverage. It appeals from the summary judgment granted to all defendants.

The Club’s former insurance policy provided fire and extended coverage for the building at issue in the amount of $635,000 and had an 80 percent co-insurance clause, which reduced the amount of coverage payable for losses unless the Club carried insurance equal to 80 percent of the value of the property. The former policy also carried an endorsement which waived the co-insurance clause. It also provided for increases in coverage limits to adjust for increases in construction costs and property values caused by inflation.

When the former policy was not renewed, the Club’s officer who handled insurance sent the Club’s copy of that insurance policy to the Washburne agency for review by it, stating that the Club wanted the same amount of coverage as existed under the prior policy and relying upon the insurance agency’s expertise in providing such coverage. There is also evidence that Washburne is an insurance consultant, as well as broker, and in that capacity charged the Club a ten percent fee in addition to a standard brokerage commission.

The former policy, comprising 72 pages, had an 80 percent coinsurance clause. It also had an endorsement for business property stating, “Val-U-Gard II Endorsement (140413-06-84) Applies to business real property Val-U-Gard Cost Index Automatic Location(s) covered: 001.” This endorsement negated the co-insurance clause under a provision located midway through the policy, stating that “[w]hen the Declarations for this Endorsement show it applies to Business Real *4Property, Coinsurance will not apply to Business Real Property.” The present policy had an 80 percent co-insurance clause which was not negated by any such endorsement.

The policy obtained by Washburne provided the same coverage limit of $635,000 and had the same 80 percent co-insurance clause, but it did not have a similar endorsement waiving the co-insurance clause.

Subsequently, the insured property was heavily damaged by fire. Because of improvements which had increased the value of the property at the time of the fire, the property was not insured for at least 80 percent of its value, and the co-insurance clause substantially reduced the coverage otherwise payable under the policy.

It is undisputed that Washburne was acting as the Club’s agent in obtaining the insurance policy. It is also undisputed that the officer of the Club handling the insurance matter read the portion of the new policy which showed the same coverage limits, and also reflected the 80 percent co-insurance requirement. The officer testified, however, that she did not understand the co-insurance requirement, did not read the remainder of the policy which explained the co-insurance clause, and did not discover that the new policy contained no similar endorsement waiving the co-insurance clause. She did not have the former policy to compare it with. The Club contends that the defendants negligently failed to explain the now-operational co-insurance clause, especially in light of the increased value of the property, and negligently failed to provide the insurance coverage sought.

“Generally speaking, an insurance agent who undertakes to procure a policy of insurance for his principal but negligently fails to do so may be held liable to the principal for any resulting loss. [Cits.] However, where the agent does procure the requested policy and the insured fails to read it to determine which particular risks are covered and which are excluded, the agent is thereby insulated from liability, even though he may have undertaken to obtain ‘full coverage.’ ” Turner, Wood & Smith v. Reed, 169 Ga. App. 213, 214 (311 SE2d 859) (1983); Ethridge v. Associated Mutuals, 160 Ga. App. 687, 688 (288 SE2d 58) (1981).

An exception to this rule applies where the agent, acting in a fiduciary relationship with the insured, holds himself out as an expert in the field of insurance and performs expert services on behalf of the insured under circumstances in which the insured “must rely [up] on the expertise of the agent to identify and procure the correct amount or type of insurance. Wright Body Works v. Columbus &c. Ins. Agency, 233 Ga. 268, 271 (210 SE2d 801) (1974).” Epps v. Nicholson, 187 Ga. App. 246, 248 (370 SE2d 13) (1988); Greene v. Lilburn Ins. Agency, 191 Ga. App. 829, 830 (383 SE2d 194) (1989). Under these circumstances, the insured is relieved of the responsibility to minutely *5examine the policy to determine if the required coverage was included within its terms. Wright Body Works, supra at 271. Even in these circumstances, however, the insured is not relieved of all responsibility to examine the policy. The duty to read remains where “an examination [of the policy] would have made it readily apparent that the coverage contracted for was not issued.” Id. at 269; Reed, supra at 215.

In this case, the question is not whether the co-insurance provisions were readily apparent; it is whether the absence of the Val-UGard endorsement’s negation of the co-insurance provision in the prior policy was readily apparent, so that it was likewise readily apparent that the inclusion of such a clause in the policy provided by Washburne without the negating endorsement provided a drastically reduced amount of coverage.

The holdings in Greene, Reed, and like cases are predicated on the fact that it would have been readily apparent to a layman reading the insurance policy, based upon the plain and ordinary meaning of clear and unambiguous language, that the risk causing the loss was not covered. An insurance policy is to be read as a layman would read it and not as it might be analyzed by an insurance expert. Hogan v. Mayor &c. of Savannah, 171 Ga. App. 671, 672 (1) (320 SE2d 555) (1984); see also Henderson v. Henderson, 152 Ga. App. 846, 847 (1) (264 SE2d 299) (1979).

Wright Body Works, supra at 268, held that where an insurance agent holds itself out as an expert in the field of insurance and the insured relies upon such expertise to determine the amount of insurance necessary to provide adequate coverage, the insured is relieved from the responsibility of having to examine the policy minutely to determine if the coverage required was that obtained. See Ethridge, supra at 688.

There are questions of fact in regard to these issues in this case.

Judgment reversed. McMurray, P. J., Pope, Cooper and Johnson, JJ., concur. Sognier, C. J., Birdsong, P. J., Carley, P. J., and Andrews, J., dissent.