Automated Calls to Advertise Insurance Services Do Not Constitute Professional Services
An Illinois intermediate appellate court has ruled that an insurance agent/broker’s automated calls to advertise its services did not constitute “professional services” and therefore did not trigger coverage under its professional liability policy. Margulis v. BCS Ins. Co., 2014 IL App (1st) 140286 (Ill. App. Ct. Nov. 26, 2014).
The policyholder, an insurance agent/broker, was named in an underlying class action lawsuit alleging that it violated the Telephone Consumer Protection Act (TCPA) by making unsolicited automated telephone calls advertising its services. It tendered that suit to its professional liability insurer, but the insurer disclaimed coverage. The policyholder later settled with the underlying plaintiffs subject to the plaintiffs’ agreement that they would seek to recover solely from the policyholder’s insurer. The plaintiffs then filed a declaratory judgment action against the insurer. The trial court granted summary judgment in the insurer’s favor, holding that the policy did not afford coverage.
On appeal, the court affirmed the decision in favor of the insurer, holding that the allegedly negligent acts of the policyholder—transmitting automated, unsolicited telephone calls advertising its services—did not arise out of the conduct of the policyholder’s business in rendering services for others as an insurance agent, general agent, or broker. The court rejected the plaintiffs’ argument that there was a “substantial nexus” between the insured’s telemarketing activity and its business as an insurance professional, noting that the policy did not contain any “nexus” language. The court also observed that the call recipients were not the policyholder’s customers, and thus that it could not have been rendering services for the call recipients as an agent or broker. Instead, the court ruled that the policy was not triggered because it would effectively have to “delete the ‘rendering services for others’ language” from the policy’s insuring agreement in order to find coverage.