A recent appellate ruling in New Jersey has once again highlighted the principle that an insurance carrier may be bound by the actions of a broker or agent with underwriting authority. In <i>Scottsdale Ins. Co. v. Woolsulate Corp., </i>(App.Div. 2008), a liability carrier gave its broker underwriting authority with clear underwriting requirements, including a refusal to deal with asbestos risks. Nevertheless, the broker issued a policy on behalf of the carrier despite knowing (according to the court’s findings of fact) that the insured had been subject to asbestos-related claims in the past. The New Jersey Appellate Division ruled that the carrier was required to provide coverage for asbestos-related claims made against its insured.
Thanks to Mendel Simon for his contribution.