ARTICLE
8 September 2024

When insurance brokers fail

RC
Rostron Carlyle Rojas

Contributor

Rostron Carlyle Rojas is an Australian firm providing accessible legal advice across business and personal law. With offices in Brisbane and Sydney and technology to serve overseas clients, they prioritize building relationships with clients.
Courts are increasingly willing to hold insurance brokers accountable for their professional failures.
Australia Insurance

If you are a property owner or conduct a business, proper insurance coverage is a critical part of asset and business protection.

Insurance should be your safety net, but what if the broker entrusted with securing your coverage fails you? When a broker's negligence leads to financial loss, it's vital to know your rights and the actions you can take to reclaim your losses. Don't let a lapse in your broker's duty undermine your financial security—empower yourself with the knowledge to hold them accountable and seek the compensation you deserve.

The Role of Insurance Brokers: Their Responsibilities and Your Expectations

Insurance brokers act as intermediaries between you and insurance companies. They are responsible for:

  • Providing Expert Advice: Guiding you in selecting the right insurance products for you.
  • Securing Appropriate Coverage: Ensuring that the policies you purchase meet your needs.
  • Protecting Your Interests: Acting in your best interest throughout the insurance process.

However, when brokers fail in these duties, the financial consequences you suffer can be devastating.

Key Legal Principles: Holding Brokers Accountable

1. Duty of Care and Skill:

  • It is well established that brokers owe a duty of care to ensure the policy they arrange covers your relevant risks (see Suncorp Metway Insurance Limited v Mason Place Pty Ltd & Anor [2011] QDC 209)

2. Disclosure Obligations:

  • Brokers must inform you about your duty to disclose material facts to the insurer and provide comprehensive advice on the insurance contract and its implications.
  • This was highlighted in Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541.

3. Negligence in Securing Appropriate Coverage:

  • Brokers may be liable for failing to secure adequate insurance coverage if this negligence leads to significant financial losses for the client.
  • In D.J. & M.A. Hose Pty Ltd ATF The Hose Family Trust v Wide Bay Insurance Broking Pty Ltd ATF The Wide Bay Business Trust [2022] QSC 191, the court found the broker liable for not obtaining necessary asbestos insurance, which resulted in substantial losses for the client.

4. Failure to Inform:

  • Brokers must adequately inform clients about policy exclusions and limitations.
  • In Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603, the court found that a failure to disclose important policy details made the broker liable for the client's resulting losses.

Conclusion:

The decisions from the cases mentioned demonstrate that the courts are increasingly willing to hold insurance brokers accountable for their professional failures. If you believe your broker has not met their obligations, resulting in financial loss, you may be able to seek compensation. If you are a property or business owner and feel let down by your insurance coverage, you may have a right to recover, but you should act quickly and seek advice. Contact our experienced property and commercial team at Rostron Carlyle Rojas Lawyers today to discuss your options and ensure your rights are protected.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More