Dublin High Court – 3 April 2020
The High Court of Ireland accepted evidence of a general practice whereby the insurance broker owes his client a duty of care to ensure that the necessary information is provided to the insurer (Chariot Inns Ltd v Assicurazioni Generali S.p.A.  I.R. 199). This decision clarifies the limits of that obligation.
In 2013, a customer, through a broker, took out an insurance policy to cover his farm. When the policy was taken out, the intermediary and his customer studied the completed proposal for insurance together and the customer found it satisfactory. However, the policy contained an inaccurate date for the construction of several old stone outbuildings, which were included among the buildings to be insured. The customer stated that they had been built between 2002 and 2007, but they were actually between 80 and 100 years old. In April 2017, a storm severely damaged the buildings. The claim was immediately reported to the Insurer, who denied cover on the grounds of this inaccuracy. The customer jointly sued the broker and the insurer, seeking compensation for his loss. In particular the customer contended that the intermediary had failed to fulfil his obligations because it had not informed him at the time the policy was taken out of the importance of disclosing the condition of the outbuildings and their construction date.
The court found in favour of the broker on the grounds that, firstly, it had in fact fulfilled his obligations and, secondly, that the customer could not claim compensation because he had deliberately provided the insurer with an inaccurate construction date.
This decision provides a reminder that a proposer for insurance must provide full and accurate information to an insurer. Correspondingly, a broker must be sure to advise his client as to the information that a prudent insurer requires on a risk and to ask the relevant questions to enable the client to provide them. The broker does not have a duty to check the information provided and is therefore not liable for any omissions or misrepresentations. In consequence, as a defence in the event that his professional liability is called into question, it is essential that a broker keeps a lasting record of all verbal and written communications with an insured concerning policy cover. A broker should also include a “health warning” to the insured that accompanies all policy information, asking him to read it carefully to check that it fully meets his demands and needs.