Motion to Dismiss Insurance Agent Denied Due to “Special Duty” Issue

In a U.S. District Court action brought against Allstate and one of its insurance agents alleging the negligent underinsurance of a residence destroyed by fire, Allstate filed a Rule 12(b)(6) motion seeking the dismissal of the agent. Allstate contended that the agent was a disclosed Allstate agent acting withing the course and scope of that agency and, accordingly, the agent should be dismissed under Lippert v. Bailey(1966) 241 Cal.App.2d 376, 282. Under Lippert, as a general rule, insurance agents acting in their agency are not individually liable. Rather, liability rests with the insurance company. In opposition, plaintiffs cited a “special duty” exception to Lippert, contending that under Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, an agent’s duty may arise when the agent holds himself out as having expertise in given field of insurance being sought by the insured.

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