Insurance Brokers Beware!

The recent Court of Appeal decision in Fisk -v- Brian Thornhill & Son stresses the need for insurance brokers to ensure that the insurers’ terms and conditions are specifically brought to the attention of the insured.

Property insurance cover had been arranged the previous year with a different insurer on the assumption that the property to be insured was brick, stone, slate and tile construction. However the property insured was, in fact, part timber framed with wattle and daub walls.

The broker sent a renewal notice for arrangements with a new insurer but did not inform the insured of the fact that if the quotation was accepted there would be new terms for the cover including terms relating to the constructin of the property. The property was damaged in a flood and the insurer avoided the insurance contract.

The Court of Appeal held that the broker’s failure to take express instructions, the failure to obtain a new proposal form before placing cover and the failure to inform the insured of the insurer’s detailed terms and conditions were breaches of duty and the broker was held liable to contribute to the insured’s losses.

The case emphasises that brokers must carefully consider what information they need to give to the insured and they must alert the insured to the insurer’s terms and conditions, particularly those that may entitle the insurer to avoid the contract.

For further information please contact Greg Cox on 0161 876 2524.