Decision of the Venice Court of Appeal: Decision No. 3509 of 20 December 2018, duty of the intermediary to advise and the insured’s obligation to disclose the risk: who is liable?
A commercial company sought to insure its premises against various risks, including damage due to fire, and took out an insurance policy for this purpose through a broker. The premises were partially destroyed by fire some time after the policy had been taken out and the insurer refused to pay compensation, contending that it had not been informed of a similar incident that had occurred several years earlier. The insured then sued the broker, contending that the broker had been aware of this prior incident, but had failed to inform the insurance company.
The Court of Appeal ruled against the insured, holding that, when disclosing the risk, it had a duty to provide accurate information and carefully complete the questionnaire furnished by the insurance company. As a result, the broker was not responsible for the information provided to the insurer, since the obligation to make an accurate and complete disclosure of the risk was solely the responsibility of the insured company and could not be validly delegated to or shared with an insurance intermediary.
A commercial insured is therefore required to provide the insurer with complete and accurate information to enable the insurer to knowingly accept the risk, and this obligation cannot be transferred to the broker. The policyholder must therefore act diligently