Cincinnati Insurance Company filed suit against its insured, Jim Guccione, d/b/a Du Page Carpet; and Guccione filed a third-party complaint against Christopher DeCaigny, an insurance agent. Cincinnati had provided workers compensation and employers liability insurance to Guccione for two one-year terms. Guccione paid the "deposit premium" of $850 but failed to pay the additional premium of $12,503, which was determined by an audit. The insured paid the "deposit premium" of $850 for the second term but failed to pay the additional premium of $10,747 after audit. Cincinnati sought to recover the additional $23,250.

Guccione, in his third-party complaint against DeCaigny, alleged that the agent had misrepresented the cost of the insurance and told the insured the cost would be "modest" and would "approximate the initial premium paid with the application." The insured stated the policies were far more expensive than the agent had predicted and, in fact, were not appropriate for the insured's needs. He sued for breach of agreement in that the agent had not provided the coverage desired at the price quoted, causing damages in the amount of $22,500.

The insured also sought recovery from the agent on the theory the agent was negligent in his statements and conduct; that the agent committed common-law fraud by making statements that he knew were false with the intent to mislead Guccione into purchasing the insurance.

The policy stated the estimated premium would be due at the beginning of the covered period; that an audit would then be done at the end of the period to determine the "final premium" and the insured would be liable for any difference.

The agent testified that Guccione had asked him to secure the coverage, and he did so and the insured paid the initial estimated premium. The insured received a copy of the policy but did not read it and, therefore, did not discover that the actual premium would be determined after an audit by the company. The agent contended he had discharged his duty when he procured the coverage requested, and any damages were caused by the failure of the insured to read his policy. The trial court granted summary judgment in favor of the agent. The insured appealed.
The agent, in his deposition, said he told the insured the final premium would approximate the initial estimated premium "only if he did not employ uninsured workers." However, Guccione did employ such workers, causing the higher premium. Furthermore, the agent stated he had told the insured there would be an audit, but he said he did not say there would be an increase in the premium after an audit was made.

On appeal, the court found there was an obvious dispute between the insured and the agent--the insured believed the cost of the coverage would be about the amount of the initial "estimated premium." The agent, however, said the final premium would be about that amount only under certain conditions. DeCaigny believed he had discharged his duty to the insured when he had secured the policies. The policy said nothing about the possibility that, under certain circumstances, the premium could be more than 15 times the "estimate." In this case, even if the insured read the policy, he would not have known that such an increase was possible. The court believed the insured had shown that the agent had breached his fiduciary duty, and the entry of summary judgment in favor of the agent was erroneous.

In conclusion, the court determined that a jury might believe the insured's claim that the agent had acted with fraudulent intent.

The summary judgment entered in the trial court in favor of the insurance agent was reversed and remanded for further proceedings.

Cincinnati Insurance Company v. Jim Guccione, d/b/a Du Page Carpet, Appellant and Third-Party Christopher L. DeCaigny-No. 2-98-1155-Appellate Court of Illinois, Second District-September 28, 1999-Rehearing denied November 24, 1999-719 North Eastern Reporter 2d 787.