In Emer’s Camper Corral, LLC v. Alderman (2020 WI 46), the Supreme Court held 6-1 that plaintiffs claiming negligent procurement by an insurance agent must establish that the desired policy was both commercially available and that the insured would have qualified for it.
After Camper Corral, a business that sells campers, had twice previously filed claims under previous insurers for approximately $100,000 in hail damage, its insurance agent Alderman procured an insurance policy through Western Heritage Insurance Company for Camper Corral to insure its inventory. The Western Heritage policy had a hail damage deductible of $5,000 per unit. According to Camper Corral, the following year Alderman told Camper Corral he obtained a reduced deductible of $1,000 per unit with a $5,000 total deductible cap. However, when Camper Corral filed a claim for another hail storm under the policy, the policy language actually retained the original $5,000 per unit.
Camper Corral filed the instant negligence action, seeking damages of amounts they were required to pay above the $5,000 total deductible cap they thought the policy included. Alderman argued that there was no evidence Camper Corral could otherwise have obtained a policy with the desired $1,000 per unit, $5,000 total deductible cap, so Alderman could have been the cause of Camper Corral’s injury.
The court found that the commercial availability of Camper Corral’s desired policy was not sufficient to establish that Alderman’s negligence caused Camper Corral’s injury. Plaintiffs like Camper Corral claiming negligent procurement must also establish that the individual plaintiff would have been able to obtain the desired policy terms. Plaintiffs themselves bear the burden to prove they could have been insurable under the desired policy terms. In this case, Camper Corral did not produce evidence to prove it could have obtained the desired hail damage policy, so Alderman did not cause Camper Corral’s damage, and the negligence claim failed.
Camper Corral raised an alternative argument under the “reliance theory” that Alderman’s negligence caused injury to Camper Corral because Camper Corral would have altered its behavior to minimize risk if it had known it was not covered by the desired policy terms. The court said plaintiffs can prove causation of injury using the reliance theory, but in this case Camper Corral failed to provide credible evidence that it would have changed its behaviors.
In a dissent, Chief Justice Roggensack argued that proving general commercial availability should be sufficient to establish causation in negligent procurement cases. According to the dissent, the court’s new standard for proving causation of injury in negligent procurement cases by establishing insurability is too burdensome on the consumer. The dissent would also have found that in this case Camper Corral did prove both that the desired policy was commercially available and Camper Corral could have been eligible for it.