16 Jun Georgia Court Decision Should Concern Agents
The recent case of Stephanie Plummer v. Commercial Insurance Agency, Inc. is an important reminder of the professional liability exposures facing insurance agents and brokers when coverage gaps leave clients uninsured. The Georgia Court of Appeals’ decision emphasizes that an agent’s failure to obtain appropriate insurance can create significant E&O exposures.
The case involved a tragic shooting in 2019 at a convenience store owned by Henry Properties, Inc. The property owner purchased a CGL policy through Colony Insurance Company from Commercial Insurance Agency, Inc. Unfortunately, the policy had an assault-and-battery exclusion that precluded coverage for bodily injury arising from shootings or firearm-related incidents. When Stephanie Plummer’s husband was killed during the incident, she filed a premises liability suit against the store owner.
The insurer later obtained a court ruling confirming that the policy did not cover the shooting due to the exclusion. Without insurance, the property owner faced a substantial financial exposure. The store owner agreed to a $1 million consent judgment and assigned its claims against the insurance agency to Plummer in exchange for an agreement not to pursue a judgment against the business.
Plummer then sued Commercial Insurance Agency, alleging negligence and breach of fiduciary duty for failing to obtain appropriate coverage. The agency argued the lawsuit should be dismissed because Georgia law generally prohibits the assignment of personal tort claims. The trial court agreed and dismissed the case. However, the Georgia Court of Appeals reversed that decision, allowing the negligence claims against the agency to proceed.
Why does this case matter to insurance professionals?
First, it reinforces the importance of understanding exclusions within commercial policies. Assault-and-battery exclusions are common in risks involving retail stores, bars, apartments, convenience stores, and other businesses where violent incidents may occur. Agents who place coverage for these operations should carefully discuss such exclusions with clients and document those conversations.
Second, the case demonstrates how E&O claims often arise not from what is covered, but from what is excluded. Many insureds assume that a CGL policy provides broad protection for bodily injury claims. When a major exclusion removes coverage for a foreseeable exposure, insureds may later argue they were never properly advised about the gap.
Third, the decision emphasizes the value of documentation. Agencies should maintain written records of coverage recommendations, rejected options, and discussions regarding exclusions. If an insured declines broader coverage or specialized assault-and-battery protection, the file should clearly reflect that decision.
Fourth, the Georgia court determined this was not a personal tort, which is generally not assignable, instead favoring a property or economic tort, which the court ruled can be assigned. Other states take a similar stance, looking at broker negligence through the lens of the distinction between personal and property torts. The Georgia court here ruled that this was an economic loss, thus assignable.
The Plummer case is another example of courts allowing third parties to pursue claims against insurance professionals through assignment agreements. Even though the injured party was not the agency’s customer, the lawsuit advanced because the insured business transferred its rights against the agency after the uncovered loss.
For insurance agents and brokers, the lesson is clear: identifying exposures and explaining exclusions are essential parts of the professional duty owed to clients. A policy that appears adequate at first glance may become the focal point of costly litigation if critical exclusions leave the insured without protection in the event of a catastrophic loss.