Cases Flashcards
The case of Fine Flowers Ltd. et al. V. General Accident Assurance Co. of Canada et Al (1977)
the destruction of flowers caused by heating pump failure was deemed by the court to be foreseeable. By failing to insure it, the broker was in breach of contract and therefore, liable for the loss.
Chapter 2-8
The case of Fletcher v. Manitoba Public Insurance Company (1990)
this was reinforced by the supreme court of Canada. The insureds (in this case, the Fletchers) had requested the maximum coverage available, and it was not until the couple had been injured in an accident with an underinsured driver that they discovered the underinsured motorist coverage had not been put in place. The court said “It is entirely appropriate to hold private insurance agents and brokers to a stringent duty to provide both information and advice to their customers. They are after all, licensed professionals who specialize in helping clients with risk assessment and in tailoring insurance policies to fit the particular needs of their customers.
Chapter 2-9
The case of Harpestad v. Hughes Agencies ltd. (2004)
The defendant broker failed to place all risk coverage on cattle as requested by the client. He was held liable for the value of the cattle that died but were not insured because a more restrictive policy was put in force. The court concluded that the client had depended on the broker to place the correct coverage and that the broker possible due to the inexperience of the employee was negligent in the performance of his duties, failing to meet the standard of a reasonable broker in the industry.
Chapter 2-9
In the Case Markal Investments ltd. V. Morley Shafron Agencies ltd (1990)
Broker Shafron was not able to place coverage requested by the client and informed the client that coverage was not available. After a loss occurred, Markal discovered that coverage was available from a market Shafron did not represent. The trial judge agreed that Shafron did not alert Markal to the possibility that coverage might be available from another broker or make it clear how limited his inquired had been and was therefore liable.
Chapter 2-10
In the case Roundy v Grain Insurance and Guarantee (1991) Sask
The clients cottage was insured on a group policy issued by the defendant company and serviced by a broker. The client bought the cabin next door to eliminate the possibility of having an undesirable neighbor, and her husband requested the broker to add this cabin to Roundy’s Insurance. After the Cabin was destroyed, the insurer denied liability because the premises were vacant more than 30 days and they were never occupied by he client. The action was dismissed against the insurer but allowed against the broker. The court asserted that the broker knew the client relied on him for advice and expertise and he failed to fulfill his obligation to obtain adequate coverage. Also, the broker should have realized that the cabin might remain vacant for an extended period and should have explained to the client the various coverage options and the ramification of each.
Chapter 2-10
In the case Goertzen et al. V. The Halifax Insurance Co et al (2003)
The clients alleged that their broker was negligent and breached the duty of care owed to them because the broker failed to inform the clients of specific exclusions applicable to vacant property. Lack of this knowledge prevented the client’s from taking additional loss control steps, such as turning off the water or adding an alarm system. Halifax Insurance was not held liable for the loss, but the broker was. The Court Stated that the broker “had a duty to make certain that Mr. Goertzen was aware of the exclusions under the vacant permit, this it not too high a standard of conduct to impose upon a broker when he knows or ought to know that the client is relying upon him for advice and for protection against insurable risks.
Chapter 2-10
In the case of Dutch Sisters Inn (1969) V continental Insurance company (1978)
When a client requests changes to coverage, a broker has a duty to comply with the clients instructions promptly. The plaintiff, who owned a restaurant and motel requested an increase of the building and contents insurance because he was renovating the premises. He also wanted to add business insurance interruption insurance. The broker led the client to believe that the change had been made when in fact, only one of the eight insurers subscribing on the risk had been contracted about the increase and the business interruption coverage had not been placed. The broker was found liable for the uninsured portion of the property and the business interruption loss.
Chapter 2-11
In the case Duraguard Fence ltd v. Badry (2019)
the defendant broker fails to advise the client that at renewal his employee dishonestly limit has been reduced from $10k to $5k. Without ever discussing the clients crime needs or investigating the prior loss history, the broker considers the reduced limit sufficient for Duraguards business. However, Durguard has experienced some crime incidents. At one point, it has a $7k piece of equipment stolen from its yard. At another point, an employee forges two company cheques for $4k each. The first instance has been disclosed to the broker but not the second. Duraguard has a well-liked employee who has been processing numerous fraudulent refund transactions. When the loss is discovered, she has stolen $500k over a period of 6 years. Duraguard relies greatly upon the expertise of its broker to secure the right kinds of commercial insurance. The principal of Duraguard is known to follow the brokers recommendations and to pay the associated costs without question. The judge finds that the broker has breached his duty to Duraguard by failing to properly inquire into and assess the clients employee dishonesty needs, not discussing the adequacy of the $5k Limit and failing to investigate other options for Duraguard for Crime insurance.
Chapter 2-11
In the case Johnson v WG Barton Ltd (1986)
The court observed that too often policies are renewed without the same care that was given when they were originally written and that changes in the insureds circumstances may require changes in coverage. In the judgement against the broker, the judge commented that the policy renewal should be treated as a significant even, “Which throws a responsibility for active participation on the agent”
The broker is also obligated to:
- Inform the insured of any restrictions in the new coverage
- Provide formal notice of cancellation or non-renewal if the current insurer is not renewing the policy
-Provide notice of unequivocal intention not to renew, with sufficient time for thew client to place the coverage elsewhere when the broker elects to cease doing business with the client.
Chapter 2-11
In the case Wilcox v. Norberg & Wiggins insurance agencies ltd (1978)
the broker was held negligent for failing to place new insurance after a renewal had been refused by the expiring insurer
Chapter 2-13
In Danielson v. Reed Stenhouse ltd (1992)
The client ignored multiple requests from the broker to complete a questionnaie regarding her wood buring stove. In this case, the courts found in favour of the broker who had made it clear that the brokerage would not undertake to renew the policy unless the insured complied with certain conditions. The court held that the loss was caused by the insureds own negligence.
Chapter 2-13
In Elliot V Ron Dawson & Associates
the clients requested luggage insurance but were not advised it was not required because they already had coverage under their tenants policy to the full policy value of $15k. However the broker had not read the policy before making this declaration. The policy provided a sublimit of $1000 for the luggage. It is a best practice to confirm specific questions against the policy wordings and to send that information to the client in writing to ensure that the coverage is understood.
Chapter 2-14
In Allstate insurance co of Canada v Wongs Insurance services 1993
The defendant broker submitted an application showing the age of the house as 19. The broker had intended to go back later and complete the year of construction as either 1911 or 1912 but he forgot to do so. In fact the home was 75 years old. Had the insurer known this, it would have ordered an inspection of the home and discovered the knob and tube wiring, which would have caused it to cancel the policy. The insurer paid the claim then initiated an action against the broker. The court found in favor of the insurer
Chapter 2-15
In the case of Wyeth v. Henry McWilliams & Wallace Ltd (1986) Ont Dis Ct
The insurer advised the broker that specified perils coverage could not be added to a motorcycle policy until an appraisal of the motorcycle was provided by the insured. The broker failed to communicate the urgency of the requirement to the client and was required to bear 60% of the loss when the motorcycle was stoeln
Chapter 2-18
In Ridgewood Farms Ltd V Economical Mutual Insurance (2001)
The broker confirmed that coverage on the insureds shed would be amended from a named-perils policy to a broad form policy. When the shed collapsed, the insurer denied the loss because the broker did not have the authority to amend coverage without underwriting approval. The court concurred that, according to the broker-insurer contract, the broker had no authority to bind the insurer.
Chapter 2-18
