Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Insurance Services West, Inc.

In this case we are presented with an issue of first impression in California: Does an insurance broker, after procuring a policy of insurance for a developer on a construction project, owe a duty to apprise a subcontractor that was later added as an insured under that policy of the insurance company’s subsequent insolvency? We conclude that, absent the assumption of a contractual duty to do so, insurance brokers owe no such duty.

Cross-complainant Pacific Rim Mechanical Contractors, Inc. (PacRim), appeals from a judgment entering dismissal of its cross-complaint against cross-defendants Aon Risk Insurance Services West, Inc., and Aon Reed Stenhouse, Inc. (together, Aon), after sustaining Aon’s demurrer to all causes of action PacRim asserted against it. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Because we are reviewing a judgment following the sustaining of a demurrer, we take the factual background largely from PacRim’s cross-complaint against Aon and Bosa Development Cahfomia, Inc.

A. The Construction Project and Insurance

The underlying litigation relates to a construction project (the project) in downtown San Diego, which was completed in 2002. In June 1999…