A Rhode Island car repossession company’s liability insurance policy lacked an important feature. The insured sued its independent insurance agency after they discovered the problem.
The business was new in late 2017 when it sought coverage from an agency with a market niche in repossession companies. “Critically,” the judge wrote in his opinion on the case, “(the insured) needed insurance coverage for not only itself but also its clients, who would be named on (the) policy as ‘additional insureds.’” Also according to the opinion, the agency “failed to ensure” that the policy covered the insured’s clients as additional insureds. The agency also did not inform the insured of this.
In the fall of 2018, one of the insured’s clients was being sued regarding a repossession that the insured had done on their behalf. The client sought defense under the insured’s liability policy and discovered they were not an additional insured. Relations between the insured and the client naturally got a bit heated. Not surprisingly, communications between the insured and the agency also got heated. One of the owners wrote to the agency in December that the client was withholding $3,300 in payment because of “your compan[y’]s negligence … I am losing money weekly because of this …”
The email explicitly stated that the insured was prepared to initiate a lawsuit if the agency did not respond within a few days. There is no record of a response from the agency.
Unfortunately, the judge’s opinion did not mention the amount of damages the insured sought from the agency, nor did it mention the number of uninsured clients. Since this was a relatively new business, it probably had a handful of clients. The damages were probably in the low- to mid-five-figures range.
Despite the threat in the December 2018 email, the insured waited (for unexplained reasons) until March 2022 to file suit. Significantly, the insured accused the agency of negligence; breach of contract; both fraudulent and negligent misrepresentation, including by concealment; and breach of fiduciary duty. The nature of the claims became important when the judge rendered his decision.
Rhode Island has a statute of limitations that sets a three-year limit on the time for suing an insurance agent for malpractice. That period runs “from the time of the occurrence of the incident that gave rise to the action …” The agency argued that the three-year window for the lawsuit had closed and therefore all seven of the insured’s claims were disallowed. The insured acknowledged that the law barred a suit on three claims (negligence, negligent misrepresentation, and negligent misrepresentation by concealment.) However, they argued that the four other claims were valid. The agency counterargued that the other claims duplicated the negligence claim. If the three-year time limit applied to the negligence claim, it applied to all the others.
In a January 21, 2026 opinion, the judge sided with the agency on all the claims except for the ones alleging fraud. Interestingly, he signaled that he might have held that the time limit applied to the fraud claims, but the agency did not argue that or meet its burden to prove it. Therefore, the two fraud claims are proceeding.
The opinion does not provide an explanation for why the agency failed to obtain the additional insured coverage. The insured’s complaint described this coverage as “standard operating practice in the repossession industry.” Why an agency that specializes in insuring these types of risks would overlook that is unexplained.
The agency prevailed on most of the claims solely because of the insured’s curious delay in filing suit. If the insured had filed the lawsuit even a few months earlier, the outcome might have been much different. Both sides made mistakes in this case. The agency was fortunate that the insured made the most significant one.
