Case offers warning to brokers
Fisk v Brian Thornhill & Sons (Court of Appeal - 28 February 2007)
A producing broker (F) appealed against the dismissal of his Part 20 claim against a placing broker (T). F through T had arranged property insurance for the claimant owners of a public house. The insurance was expressly arranged on the basis that the property construction was brick, stone, slates and tiles. Notwithstanding the owners' incomplete answers on the proposal form, and the fact that the property was of wattle and daub construction, cover for one year commenced in October 2000.
Acting on instructions to renew the insurance, T proceeded to arrange cover with a new insurer from October 2001.
A copy of the quotation was not supplied to T or to the owners. Importantly, that quotation required a warranty that the property was brick, stone, slates and tiles. When the property was damaged by floods on 21 October 2001, insurers refused cover on the basis that the property was not of brick, stone, slates and tiles construction.
The court allowed F's Part 20 claim, concluding that T was in breach of the duty to the owners, in that T did not make it clear that they were intending to effect the new policy with a different insurer, who had different terms and conditions. Furthermore, T should have clarified the ambiguity in the information he received from the owners in the preceding year regarding the structure of the property.
On the facts, the court was prepared to accept that the placing broker owed a direct duty to the ultimate insured. Moreover it illustrates that, a broker must take caution in relying on information provided by the insured if the facts/circumstances put him on enquiry as to its accuracy. - Alexander Traill, BLM London
These law reports are contributed by national law firm Berrymans Lace Mawer (www.blm-law.com).
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