Florida brokers can now be liable just for staying silent when coverage doesn't exist, an appeals court ruled January 2.
The decision from the Fifth District Court of Appeal marks a significant shift in how broker liability works. Until now, the prevailing wisdom held that brokers couldn't be blamed for failing to procure insurance that didn't exist in the marketplace. This ruling changes that calculus.
The case stems from Hurricane Matthew, which slammed into Ormond Beach in October 2016. Two restaurants, Houligan's Pub & Club and Ormond Wine Company, suffered substantial damage when sewage backed up through floor drains during the storm. When they tried to file claims under their Lloyd's of London policy, the insurer balked, arguing the policy didn't cover that type of damage. Three years of litigation later, the courts agreed with Lloyd's.
But that's when things got interesting for Brown & Brown of Florida, the insurance broker that had placed the coverage.
The restaurants sued their broker on three grounds: negligent failure to procure insurance, breach of fiduciary duty, and negligent misrepresentation. After a five-day trial, the jury delivered a split verdict. It sided with Brown & Brown on the procurement claim. But jurors also found the broker had breached its fiduciary duty and made negligent misrepresentations.
The jury assigned Brown & Brown 60 percent of the blame and each restaurant 40 percent, ultimately awarding Houligan's $647,400 and Ormond Wine $314,511.60. With prejudgment interest tacked on, the total judgments climbed to $919,865.88 for Houligan's and $440,971.61 for Ormond Wine.
Brown & Brown appealed, but here's what the broker didn't contest: that it had a fiduciary duty to the restaurants, that it breached that duty, and that it made negligent misrepresentations. What the broker challenged was whether it should be on the hook for damages when the coverage the restaurants needed may not have even existed in the marketplace.
The broker pointed to a 1998 Florida First District decision, Capell v. Gamble, which held that agents can't be liable for failing to procure insurance that didn't exist. That ruling required plaintiffs to prove the coverage they wanted was actually available somewhere.
The Fifth District declined to extend that precedent. Writing for the panel, Judge Makar explained that Capell dealt specifically with negligent procurement claims, which are narrower than fiduciary duty and misrepresentation claims. Those other claims, the court said, aren't necessarily tied to whether a specific policy exists.
The court pointed to its own recent decision from 2024, E&R Environmental Services v. Sihle Financial Services, which established that brokers have a duty to inform clients when requested coverage can't be obtained. Even if the insurance doesn't exist anywhere, the broker still needs to tell the client so they can consider their options.
That duty to communicate, the court said, exists separately from the duty to procure coverage. A broker might not be negligent for failing to get impossible coverage, but could still breach fiduciary duties or make negligent misrepresentations by staying silent about it.
The court did hand Brown & Brown one victory. It found that the jury had calculated damages based largely on what the Lloyd's policy would have paid, but previous litigation had definitively established that policy provided no coverage for the sewage damage. The court said that was an error and ordered a new trial solely on damages, without reference to the Lloyd's policy. Damages in these cases aren't limited to what an insurance policy would have paid - plaintiffs can also recover consequential damages like lost profits if they can prove them.
The decision creates a new wrinkle for insurance professionals. It's no longer enough to procure whatever coverage a client requests. Brokers now have a clear duty under Florida law to speak up when the coverage a client needs isn't available, giving the client a chance to make informed decisions about their risk.
The case also highlights the importance of understanding the different legal theories that can apply in broker liability cases. While Brown & Brown prevailed on the procurement claim, it still faced liability under the other two theories, each with its own elements and potential damages.
The ruling isn't final yet and remains subject to post-judgment motions under Florida's appellate rules. But for now, it stands as a warning to brokers that silence can be costly, even when delivering bad news about unavailable coverage.
For the two Ormond Beach restaurants, the path forward means another trial to determine what damages they're actually owed. For the insurance industry, it means a new standard for broker communication and disclosure, one that could reshape how agents handle difficult conversations with clients about coverage gaps and limitations.
