Assignment:
Barbara is an experienced independent insurance agent. Her client, Ralph owns a small business. Barbara has been Ralph's agent for all of Ralph's personal and business insurance needs for ten years.
1. On February 1, 2017, at the last renewal of Ralph's comprehensive general liability policy for his business, Ralph said to Barbara: "I am concerned about some of these Insurance companies. Are you sure that they will be able to pay if I have a claim?" Barbara replied: "Don't worry. I only use companies licensed to do business in Kentucky and they all have at least an A- rating from Bests."
2. On September 1, 2017, a customer was injured while in Ralph's store. Ralph submitted the claim to the insurer that day but the insurer did not pay the claim.
3. At the time Barbara sold Ralph the policy, the carrier was licensed in Kentucky and was rated A-by Bests. In March 2017, the carrier's CEO and CFO were arrested and charged with securities fraud. In April 2017, after this became public, Bests reviewed the carrier's financials and reduced the carrier's rating to B. In May 2017, the Kentucky DOI began an audit of the carrier's financial statements. In June, Bests dropped the rating to C. In July, the Kentucky Insurance Department seized control of the carrier. On August 30, 2017, the Kentucky DOl declared the insurer bankrupt.
4. Discuss whether Barbara has any liability to Ralph's business for her actions with respect to selling the policy that did not pay the injury claim.