14.3 Professional Negligence

• Jurisdiction: Arizona

14.3 Professional Negligence. To establish a claim for professional negligence against an insurance producer, the plaintiff must prove: (1) the insurance producer had a duty to the plaintiff; (2) the insurance producer’s conduct fell below the standard of care, thus breaching the duty; (3) the plaintiff suffered damage; and (4) the insurance producer’s breach was the cause of plaintiff’s damages.⁴⁷ Arizona law generally requires expert testimony to establish breach of an insurance producer’s standard of care.⁴⁸

When a person has knowledge, skill or training superior to that of the average person, a court considers these heightened capabilities in determining whether he or she behaved reasonably under the circumstances.⁴⁹ Because professionals have specialized skills, they must exercise the same skill, care and diligence, and possess the same knowledge and abilities, as a reasonably prudent person in their profession.⁵⁰ This requirement does not impose a higher standard of care on professionals. Instead, it is one element to consider in assessing whether a person behaved reasonably.⁵¹ In Darner Motor Sales v. Universal Underwriters Insurance Co., the Arizona Supreme Court held that because of their superior knowledge and skill, insurance producers are professionals who must adhere to a standard of reasonable care.⁵²

Darner established a professional negligence standard for insurance producers,⁵³ explaining that their professional status requires that they assume duties and responsibilities commensurate with that status.⁵⁴ The court there recognized that “a person who holds himself out to the public as possessing special knowledge, skill or expertise must perform his activities according to the standard of his profession.”⁵⁵ “If he does not, he may be held liable under ordinary tort principles of negligence for the damage he causes by his failure to adhere to the standard.”⁵⁶ Ultimately, the Darner court held that an insurance producer must exercise reasonable skill, care and diligence in carrying out the producer’s duties to the insured in procuring insurance.⁵⁷

Under Arizona case law, an insurance producer is accordingly required to exercise reasonable care in selecting the appropriate contract for the customer.⁵⁸ An insurance producer also “has the duty to advise his client as to the insurance he wants, including the limits of the policy to be issued.”⁵⁹ Darner reasoned that “[w]hen insurance [producers] perform . . . services negligently, [the insurance producers] should be held liable for that negligence.”⁶⁰ Subsequent Arizona cases have clarified this holding to highlight the distinction between the duty owed by insurance producers and the conduct that satisfies their legal obligations.

Southwest Auto Painting & Body Repair, Inc. endeavored to resolve the important and often blurred distinction between the duty owed and what constitutes a breach of that duty.⁶¹ Whether an insurance producer owes someone a duty of care is a question of law for the court.⁶² The court determines if such a duty exists by considering whether the relationship between the parties requires the defendant to use care to avoid injury to the plaintiff.⁶³ Duty is found in the relationship between individuals that “imposes upon one a legal obligation for the benefit of the other.”⁶⁴ The details of compliance with a duty “have to do with whether the defendant breached the applicable standard of care, not whether a duty and attendant standard of care exist.”⁶⁵ Thus, whether the producer’s conduct constituted a breach of the applicable standard of care is a question of fact for the jury, and need only be answered if a duty exists as a matter of law.⁶⁶

Though the...