How a policy’s silence may lead to extra-contractual exposure

A recent Florida appellate decision highlights an emerging professional liability risk that extends beyond agents and brokers and directly into insurer Extra-Contractual Obligation (ECO) exposure.

In Brown & Brown of Florida, Inc. v. Remus the Fifth District Court of Appeal held that a broker could be liable not for failing to procure coverage that did not exist, but for failing to clearly inform the insured that such coverage was unavailable at all. Liability was upheld under fiduciary duty and negligent misrepresentation theories, even though the underlying policy was found to provide no coverage.

That distinction matters—particularly for insurers.

The ruling reinforces a growing judicial focus separate from policy interpretation. Courts may look past the scope of the immediate defendant (in this ruling, a broker) and examine whether coverage exists and whether an insured was led to reasonably believe it existed. That analytical separation is fertile ground for ECO claims.

Extra-Contractual Obligations (ECO) refers to liability that exists outside the four corners of the policy—arising not from what coverage provides, but from how coverage decisions, communications, or conduct are handled.

From a carrier perspective, this decision highlights several exposure paths. Agency and broker communications, such as training materials, marketing language, placement guidance, and scripts are often discoverable in litigation. Even where brokers are independent, plaintiffs often argue apparent authority or seek to pull carriers into E&O disputes indirectly. Vague references to “market availability,” aspirational coverage discussions, or poorly documented exclusions can all amplify downstream risk.

The implications extend into claims handling as well. Failing to clearly explain why coverage doesn’t exist, or allowing an insured to assume coverage might apply, can be reframed as negligent misrepresentation rather than a straightforward denial. That shift increases the likelihood of extra-contractual allegations, even where policy language is clear.

Notably, damages in these cases are not limited to what a policy would have paid. Indirect loss, including lost profits, may still be recoverable, an outcome that directly implicates ECO severity.

Although the ruling remains subject to further proceedings, it serves as a warning for the industry. Silence about coverage gaps is no longer neutral. For insurers, mitigating ECO exposure increasingly requires clear documentation, disciplined communication practices, and consistent messaging around what coverage does not exist—across underwriting, distribution, and claims.

This is a theme we expect to continue as professional liability and ECO claims evolve.

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