Insurance brokers play a vital role in the insurance process. Beyond assisting in the placement of the insurance program, they are often the first to be consulted by the policyholder after a major loss or liability. In fact, brokers are often so involved in the claim process that policyholders may consider their communications with brokers to be privileged and immune from discovery by insurers after a claim dispute arises. Unfortunately, that is not always the case.

Generally, the attorney-client privilege protects confidential communications between attorneys and their clients with regard to the rendering of legal advice. Communications are protected when they are necessary for the effective communication between attorneys and their clients. Protection may not be available when the communication is extended to someone outside of the attorney-client relationship or when the communication involves business, as opposed to legal advice.

Courts throughout the country are split on whether broker communications are privileged. Those courts that uphold the privilege recognize that insurance brokers negotiate the coverage and, thereafter, serve as necessary advisors to policyholders. Other courts uphold the privilege when the communications with the broker are made for the purpose of facilitating legal advice. Conversely, some courts refuse to extend the privilege after concluding that insurance brokers are outside the scope of the attorney-client relationship or that the broker provided business, as opposed to legal, advice.

Accordingly, any communications with brokers should be undertaken with an understanding that they may not be protected from disclosure. And, in order to maximize whatever protection that may be available, any sensitive communications with insurance brokers should be made pursuant to a confidentiality agreement and clearly marked as “Privileged and Confidential.”

Questions? Contact  Lee Epstein at Weisbrod Matteis & Copley PLLC.