Insurance Broker Seeks Quick Win in Bond Coverage Suit


(USA Herald) – This is the case of Greco v. Arthur J. Gallagher & Co. Insurance Brokers of California Inc. et al., in the U.S. District Court for the District of Arizona.

Insurance broker, A.J. Gallagher Risk Management Services Inc., has requested a quick win in the lawsuit brought against them by bond seller, NGIA Inc., as their breach of contract claim resembles more of a tort than a contractual issue. The motion for summary judgment argued that the broker cannot be held responsible for breach of contract as no contractual agreement was established between the two parties concerning insurance protection for bonds sold in 2018.

The bond seller filed a lawsuit in September against A.J. Gallagher and one of its agents, Karen Canton, alleging that they should be held accountable for bad insurance advice that caused NGIA to be without coverage, resulting in at least $3.5 million in damages. According to the suit, the bond seller sold a $4 million surety bond in August 2018, at which time it held a professional liability insurance policy with Hiscox. However, in February 2019, NGIA canceled that policy in favor of one with Admiral Insurance.

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The lawsuit alleges that Canton and A.J. Gallagher failed to notify NGIA and Sharlotte Lee Croxford, its president, that coverage for any claims related to surety bonds sold before January 30, 2019, would be lost when they switched to Admiral.

The bond seller later filed a professional negligence action against Joseph J. Greco, following the default of the $4 million bond. They reached a $3.5 million settlement in June 2021 for Greco’s action, and as part of the settlement, NGIA and Croxford assigned Greco their claims against A.J. Gallagher and Canton.

A.J. Gallagher argued that when Canton provided quotes to Croxford for potential insurance coverage options, the retroactive date of the new policies was explicitly outlined to Croxford as the inception date, which was in late January 2019. In response, Greco argued that the broker’s “motion lacks merit” and “ignores the conflicting testimony” provided by the plaintiff’s fact and expert witnesses.

The case is being handled in Arizona federal court, with Greco being represented by Lang & Klain PC and Bochetto & Lentz PC, and A.J. Gallagher and Canton being represented by Morales Fierro & Reeves.

This lawsuit is a typical example of disputes that may arise between insurers, policyholders, and agents in the insurance industry. This type of lawsuit often involves the interpretation of the insurance policy, regulatory compliance, and other issues that may arise during the claims process. This lawsuit, in particular, demonstrates the importance of ensuring that all parties involved understand the coverage terms and scope of the insurance policy.

Samuel Lopez, a reporter for USA Herald, is closely following this case. This article provides crucial information to readers and highlights the importance of understanding the scope of insurance policies and its terms, and the significance of lawsuits that arise between insurers, policyholders, and agents in the insurance industry.