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Legal Updates for Insurance Agents & Brokers

Top Ten Ways an Insurance Broker Can Avoid Liability

Legal Update for Insurance Agents & Brokers – December 2022

December 20, 2022

by Estelle Kokales McGrath

How does an Insurance Broker avoid liability? My husband, who is a broker, would say it is having an attorney for a wife, but all brokers cannot be that lucky. Seriously, here are a few tips that can keep a broker out of hot water:

  1. Document Conversations. Brokers, like many professionals, speak to multiple clients a day, and certainly as time passes, memories fade. Even if you have a mind like a steel trap, it is better to have contemporaneous documentation that memorializes a transaction, including what insurance was offered and declined. Brokers should make it a practice to document conversations with clients, whether it is through an agency database or even something as simple as an email or letter.
  1. Do Not Interpret Coverage. Brokers should resist interpreting whether an insurance policy covers a particular claim. It is better to encourage a client to promptly report a claim to the insurance company and let them interpret the policy provisions. A broker should not be giving advice on whether a particular or anticipated claim is or would be covered.
  2. Do Not Advocate for Coverage. Of course, brokers want the best for their clients, but advocating for coverage is simply outside of the job duties. It is commonly argued that such advocating can blur the lines of a broker’s duties and responsibilities to the client. Brokers should stay in their lane.
  1. Check Your Website. Most professionals like to brag that they have expertise in a certain area or that they specialize in a particular line of business. Brokers should check their website, their social media content and marketing materials to ensure they are not holding themselves out as experts or specialists. These statements are commonly used against a broker in litigation.
  1. Direct Billing Preferred. If possible, the best practice is to have the insurance company bill the client directly versus agency billing. If the broker is taken out as the middle man, there can be no argument that the broker failed to properly or timely process such payment or premium.
  1. Require Clients to Complete Insurance Application. Brokers should have their clients review and complete all insurance applications. The client should sign the application on their own behalf as they are in the best situation to provide a proper history. Further, the broker should counsel their client to be honest and to disclose all information requested in any such application. The broker should refrain from completing the application or making any changes or additions.
  2. Responding to Insurance Company’s Request for Additional Information. If the insurance company requests additional information for an application or in response to a claim, the broker is encouraged to secure that information from the client in writing so there are no miscommunications.
  3. Notice of Cancellation Practice. Brokers should advise their clients that if a policy is cancelled, such notice will come directly from the insurance company. In Pennsylvania, the insurance company (not broker) has the responsibility to advise of a cancellation or refusal to renew. In a perfect world, a client would acknowledge that the broker has no responsibility or duty to give them notice of cancellation before any cancellation occurs. If a broker sends a courtesy copy of the notice of cancellation on one occasion but then fails to do so thereafter, the client may improperly think that the broker had some duty to provide such notice.
  4. Renewal Practice. Brokers should confirm current coverages are accurate with their client and should also carefully check renewal policies for any differences, including new exclusions or restrictions. The broker should also inform the client of the changes in writing and confirm the client’s approval.
  1. Inform Client of All Available Products. Brokers should inform their clients of all available products, including cyber, pandemic and employment coverage to maximize their protection. A best practice is to include a checklist of all available products offered to the client and document what products were rejected.

A broker should advise their Errors & Omissions carrier immediately when it is made aware of a claim or a potential claim. It is better to err on the side of caution and let the insurance company determine when a defense is triggered under the policy. The earlier the broker secures legal counsel, the better chances it has to reach an early, amicable resolution of such a claim.

Estelle Kokales McGrath is a shareholder in the Professional Liability Department in the Pittsburgh office of Marshall Dennehey. She primarily concentrates her practice in the areas of employment law, public entity/civil rights, real estate, and insurance agent errors & omissions litigation in both the state and federal courts of Pennsylvania and West Virginia. She may be reached at ekmcgrath@mdwcg.com.

 

 

Legal Update for Insurance Agents & Brokers – December 2022, has been prepared for our readers by Marshall Dennehey. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note tgventura@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2022 Marshall Dennehey. All Rights Reserved.

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Thought Leadership

The Enforceability of Online Arbitration Agreements Remains Unresolved in Pennsylvania, But the Pennsylvania Superior Court has Provided Substantive Guidance on the Issue

Key Points: The Pennsylvania Supreme Court confirms that an order compelling arbitration is not immediately appealable as collateral orders. The outcome of Chilutti II has generally left the substantive enforceability issues with browsewrap agreements unresolved in Pennsylvania. Until this issue is resolved by the Pennsylvania courts, companies operating in the Commonwealth should strive to ensure that their registration websites and/or application screens conspicuously present arbitration agreements in manners which ensure their users and consumers assent to the terms of the agreements by following the standards set forth in Chilutti I. Browsewrap agreements have been defined as agreements “‘in which a website offers terms that are disclosed only through a hyperlink and the user supposedly manifests assent to those terms simply by continuing to use the website,’ and typically do not require an electronic signature.” See, Cobb v. Tesla, Inc., 2026 WL 458470, at *1 n. 2 (Pa. Super. Feb. 18, 2026) (citation omitted). They are largely regarded as the “if you keep using this, you agree to everything buried in this link” terms embedded into almost every online agreement consumers and users sign before proceeding with purchases of goods and/or services. While consumers are generally aware of them, many almost never click on the link, nor read them in their entirety. This leaves many consumers and users ignorant of the terms and impact of such agreements. However, one’s ignorance of the otherwise neatly-tucked-away terms rarely renders them unenforceable. The issue of the enforceability of browsewrap agreements has been up for debate for some time in many jurisdictions, including Pennsylvania. Indeed, Pennsylvania had a brief grip on this issue for a period in time. Specifically, in 2023, an en banc Superior Court set forth heightened standards for companies to meet in order to secure assent and enforce browsewrap arbitration agreements. See Chilutti v. Uber Techs., Inc., 300 A.3d 430 (Pa.Super. 2023) (en banc) (“Chilutti I”) Chilutti I involved a husband and wife who sued Uber and its subsidiaries after the wife, a wheelchair bound passenger using Uber’s rideshare service, fell, struck her head, and lost consciousness due to her uber driver failing to provide a seatbelt and making an aggressive turn during the trip. The Chilutti’s filed a negligence lawsuit against Uber and its subsidiaries. In response, the defendants moved to compel arbitration, arguing that “the couple’s conduct on the company’s website and application — when they registered for the ridesharing service — signified that they agreed to be bound by the mandatory arbitration provision found in the hyperlinked terms and conditions.” The trial court granted the defendants’ petition and stayed the proceedings pending the results of arbitration, and the Chilutti’s appealed. On appeal, the Superior Court addressed two issues. First, it addressed the issue of whether it had jurisdiction to hear the appeal. A divided Superior Court determined that it did, with its basis for the holding being that the order from which the Chilutti’s appealed was a collateral order. Next, the Superior Court set out to address the merits of the Chilutti’s substantive claim. The Superior Court concluded that the parties lacked a valid agreement to arbitrate. Its rationale was that Uber’s website and application did not provide reasonably conspicuous notice of the terms to the Chiluttis. In reaching this decision, the en banc Superior Court held that browsewrap arbitration agreements are enforceable in Pennsylvania only if the registration website and application screens explicitly inform consumers that they are waiving the right to a jury trial, the registration process cannot be completed until the consumer is fully informed of this waiver, and, when the agreement is available via hyperlink, the waiver appears at the top of the first page of the terms in bold, capitalized text. Since the ruling, Pennsylvania courts have applied Chilutti I to determine if browsewrap agreements are enforceable.  For instance, the Allegheny County Court of Common Pleas invoked Chilutti I to reject an agreement that lacked an express jury-trial waiver on the assent screen.  See Miller v. Festival Fun Parks, LLC, 92 WDA 2025 (C.P. Alleg. Cnty. Mar. 24, 2025). Similarly, the Superior Court has held that notice which failed to explicitly state the consumer was waiving a jury-trial right did not “me[e]t the strict burden set forth by our en banc Court in Chilutti I.” Pierce v. FloatMe Corp., 348 A.3d 1077, 1088 (Pa. Super. 2025). While the issue of enforceability of browsewrap agreements appeared to have been resolved by Chilutti I, Pennsylvania courts’ grip on this issue has been slackened by the Pennsylvania Supreme Court’s January 21, 2026, opinion in Chilutti II. See Chilutti v. Uber Techs., Inc., 349 A.3d 826 (Pa. 2026) (“Chilutti II”). Therein, the Supreme Court did not address the merits of the Chiluttis’ substantive claim, but rather the issue of whether the Superior Court had appellate jurisdiction to immediately review the orders staying litigation pending arbitration. The Court ultimately vacated the en banc opinion on jurisdictional grounds, holding that the Superior Court did not have appellate jurisdiction because the trial court’s order from which the Chiluttis appealed did not qualify as a collateral order and, thus, the Superior Court erred in holding to the contrary and lacked jurisdiction to entertain the merits” of the Chiluttis’ substantive claim. As such, Chilutti II has rendered Chilutti I nonbinding, and the issue of enforceability of online arbitration agreements remains unresolved. However, in light of the fact the Supreme Court did not address or comment on the merits of the Chiluttis’ appeal, Chilutti I is still meaningful. Specifically, it provides guidance as to the standards a company should strive to meet to ensure they have obtained users’ assent so that they are able to enforce online arbitration agreements. Additionally, it may serve as persuasive authority in judges’ evaluations of petitions and/or motions to compel browsewrap arbitration agreements until this particular issue is properly put before our appellate courts. Keanna works in our Pittsburgh, PA office. She can be reached at (412) 803-1174 or KASeabrooks@MDWCG.com.