Brown & Brown E&O: The $1.36M Coverage Silence
Jurisdiction: Florida Fifth District Court of Appeal (2026) | Case Docket: Brown & Brown of Florida, Inc. v. Houligan’s Pub & Club, Inc. et al. (Case Nos. 5D24-2352 & 5D24-2458)
The Scenario
Brown & Brown defeated the allegation retail agencies dread most in commercial litigation: negligent failure to procure insurance. Yet the national brokerage still faced amended trial judgments totaling $1.36 million. The surviving exposure was not rooted in the policy form the broker bound. It centered on what the jury found the broker had verbally represented, and whether the clients received timely written notice that their intended protection was missing.
While the appellate court subsequently vacated the initial damages calculation and ordered a new damages trial, it left the jury findings of fiduciary breach and negligent misrepresentation fully intact.
Two hospitality businesses operating in Ormond Beach, Houligan’s Pub & Club and Ormond Wine Company, engaged Brown & Brown of Florida to handle their commercial property insurance program. The brokerage assigned a commercial property specialist to service the accounts. During executive meetings with the restaurant leadership, the broker made statements regarding the hurricane coverages he would be positioned to secure across the commercial market.
The only coverage placed for the accounts consisted of policies underwritten through Lloyd’s of London. In October 2016, Hurricane Matthew swept across coastal Florida. During the storm, municipal sewage backed up through the interior floor drains, inundating both restaurant premises. The resulting destruction exposed an immediate gap between the protection the clients believed had been arranged and the actual terms the carrier had written.
The Legal Autopsy & The Ruling
Lloyd’s immediately contested coverage for the interior drain backup and filed for declaratory relief. Following protracted coverage litigation, Florida courts ruled that the Lloyd’s policies did not cover the sewage event, an outcome affirmed on appeal in 2021.
With carrier indemnity extinguished, the restaurant entities filed suit against Brown & Brown asserting three independent causes of action:
- Negligent Failure to Procure Insurance: Alleging the broker failed to secure the necessary commercial terms.
- Breach of Fiduciary Duty: Alleging the broker failed to act in the clients’ best interests by leaving them unadvised on critical coverage gaps.
- Negligent Misrepresentation: Alleging the broker gave misleading verbal assurances regarding the scope of protection.
Following a five day trial, the jury rejected the negligent failure to procure claim outright. Under Florida law, a procurement claim fails when the specific insurance sought was not commercially available on the market. However, the jury returned verdicts against Brown & Brown on both breach of fiduciary duty and negligent misrepresentation, assigning 60 percent comparative fault to the broker and 40 percent to the restaurant operators.
On appeal in Brown & Brown of Florida, Inc. v. Houligan’s Pub & Club, Inc. (427 So. 3d 153), the Florida Fifth District Court of Appeal addressed this exact friction as an issue of first impression. The court held that an inability to procure coverage does not grant an insurance broker blanket immunity against misrepresentation or fiduciary breach. Even when requested coverage cannot be obtained anywhere in the marketplace, a broker retains an operational duty to inform the client of that gap so the business owner can explore alternative risk management strategies.
The Financial Breakdown & The Remand
The trial level math demonstrates how quickly unmanaged producer conversations compound into substantial balance sheet exposure:
| Claimant Entity | Jury Assessed Loss | Broker Share (60%) | Amended Judgment + Interest |
|---|---|---|---|
| Houligan’s Pub & Club | $1,079,000.00 | $647,400.00 | $919,865.88 |
| Ormond Wine Company | $524,186.00 | $314,511.60 | $440,971.61 |
| Combined Trial Exposure | $1,603,186.00 | $961,911.60 | $1,360,837.49 |
The Fifth DCA vacated the $1,360,837 calculation because the trial court improperly measured damages by reference to the Lloyd’s policy terms, which had already been adjudicated as providing no coverage for sewage backup. The appellate court remanded the case for a new trial limited strictly to damages, noting that consequential damages such as proven lost profits may remain recoverable.
Brown & Brown succeeded in setting aside the original damages calculation. It did not eliminate the underlying findings of liability, nor did it avoid the ongoing expense of a second damages trial.
3 Operational & E&O Takeaways
- Issue an Unavailable Coverage Advisory as a Standalone Deliverable: When underwriting confirms that requested terms cannot be placed, that notification cannot remain an unlogged verbal conversation. The agency management system must document what was requested, which surplus lines or standard markets were approached, what was formally declined, and an exact timestamp showing when the client received written notice.
- Separate the Request, the Quote, and Bound Terms: Operational risk concentrates when producers combine three separate files into a casual verbal update: the client’s requested outcome, the carrier’s actual quote, and the terms bound. Every variance between the customer application and the binder requires an exception disclosure before binding coverage.
- Audit Producer Verbal Assurances on Catastrophe Lines: Sweeping statements such as “You are fully covered for storm damage” or “We have everything handled” demolish an agency’s legal defense. Implement peer review across all commercial property binders in storm exposed regions to verify that written schedules align with representations made during production meetings.
Winning a procurement defense by showing that requested insurance did not exist in the marketplace is an incomplete victory. Under modern appellate standards, your agency cannot rely solely on hard market capacity constraints or restrictive policy forms when the producer failed to deliver an explicit, documented explanation of what remained unplaced. The operational inquiry focuses squarely on verification: did the policyholder receive a clear, timely, and written disclosure of the coverage gap before the catastrophe struck?
Turn Operational Cleanliness into Agency Equity
Undocumented coverage gaps and casual producer promises create latent liabilities that discount agency transaction multiples.