By Dave Simpson

Law360 (October 13, 2020, 11:40 PM EDT) -- Insurance broker Arthur J. Gallagher & Co. failed to get communicable disease coverage for its client, NetDiligence, whose networking summits aimed at those in the cyber risk insurance industry were canceled due to the pandemic, NetDiligence said in a New York federal court suit filed Tuesday.

Network Standards Corp., which does business as NetDiligence, says it asked its broker of 18 years to procure the infectious disease coverage but was shocked to find that it was not there after the coronavirus outbreak forced the cancelation of several of its summits.

The suit, which seeks unspecified damages, asserts claims of negligence, negligent misrepresentation, negligent supervision and breach of fiduciary duty, and names both AJG and the "inexperienced" AJG employee who NetDiligence says is responsible for the error.

"It defies logic that an inexperienced broker would unilaterally cancel communicable disease coverage without having any discussion with a longtime client such as NetDiligence on why a previously AJG recommended coverage was being cancelled, all while NetDiligence was growing revenue for each event and, as a result, increasing its overall premium," the suit says.

NetDiligence says that year after year it insures its Cyber Risk Summits, which it says involve thousands of cyber risk insurance, legal and regulatory, and security and privacy technology leaders from around the world. As recently as 2018, AJG's broker made clear to NetDiligence that it had communicable disease coverage, the suit says.

"However, in 2019, AJG assigned NetDiligence's account to defendant Jacklyn Hucke, an inexperienced broker who is only a few years removed from graduating college," the suit alleges.

Hucke, the suit claims, made a series of errors, changing the policy from the previous years to exclude the communicable disease coverage, assuring NetDiligence that the plan was the same as previous years, and failing to follow up with the company when someone with the underwriter and managing general agent, Buttine Underwriter's Agency LLC, noted the lack of coverage.

"Had a clear menu option been delivered by AJG to NetDiligence listing the proper values and schedules per event, Hucke would not have had to guess when she mistakenly and unilaterally confirmed coverage to BUA," the suit says. "AJG created confusion for its broker and for its client NetDiligence by ignoring the need to document accurate pricing, by utilizing different confusing forms to bind coverage and by not following up with the client when clearly asked to do so by BUA."

Shortly after the policies were hammered out, the pandemic shut the world down, forcing NetDiligence to cancel events in London, Philadelphia and elsewhere, the suit says.

"NetDiligence attempted to work with AJG in resolving the NetDiligence claim due to the professional failures of Hucke but without any success and ultimately notified the carrier, Lloyd's of London, of the claim for coverage," the suit alleges. "On June 19, 2020 Lloyd's denied coverage, asserting that communicable disease was not included in NetDiligence's coverage."

Representatives for the parties did not immediately respond to requests for comment Tuesday.

NetDiligence is represented by H. Marc Tepper and Kyle Black of Buchanan Ingersoll & Rooney PC.

Counsel information for AJG and Hucke was not immediately known.

The case is Network Standards Corp. v. Arthur J. Gallagher & Co. et al., case number 1:20-cv-08516, in the U.S. District Court for the Southern District of New York.

--Editing by Breda Lund.

For a reprint of this article, please contact reprints@law360.com.