Claims For Insurance Broker Negligence

As true specialists in our field, we act for clients nationwide in claims for insurance broker negligence, as well as in claims against other professionals.

Resolving claims for insurance broker negligence

From the outset, we focus not on making professional negligence claims on behalf of our clients, but on resolving them. In this way, we ensure that ours is a broader perspective and a more open mind.

Moreover, and by harnessing our:

  • wealth of experience acting in claims against a wide-range of professionals
  • unique insight into the defence of claims for insurance broker negligence
  • commitment to providing a client-centric service as part of our core values
  • innovative and highly efficient service provision

we ensure that our clients achieve better results for substantial claims, time and again.

The insurance broking profession 

Historically, professional negligence claims against insurance brokers were something of a rarity. This was not because mistakes made by such brokers were particularly uncommon, but because the insurers with whom cover was placed were often prepared to alleviate their effect by waiving their right to reduce or avoid cover for a claim. Typically, this was done in recognition of a wider commercial relationship and the potential to recover the avoidable liability through the receipt of future premium.

However, as markets have become more competitive, relationships more distant and financial pressures more acute, such allowances are being made much less readily. As a result, there has been a discernible increase in the number of claims being pursued against the insurance broking community.

Common mistakes by insurance brokers

Some of the common mistakes that can give rise to successful claims for broker negligence are:

  • A failure to ascertain a client’s insurance needs
  • A failure to convey material information about a risk to an insurer
  • A failure to arrange insurance cover for a particular risk
  • A failure to arrange insurance cover on terms requested by a client
  • A failure to arrange insurance which meets the needs of a client
  • A failure to notify a claim in accordance with policy terms and condition

Real-life examples of claims that has been successfully pursued against insurance brokers are available in our article: Successful claims against negligent insurance brokers

Assessing the merits of a claim

While the fact that cover for an insurance claim has been reduced or declined may well provide grounds for a professional negligence claim, by itself it is not conclusive. Therefore, before embarking on a claim for insurance broker negligence, a careful assessment will need to be undertaken of a number of important issues, including:

  • The scope of the legal duties owed by the insurance broker
  • Any actions taken by the insurance broker to comply with those duties
  • The nature and extent of the loss caused by any breaches of those duties

This can be a complicated process and the merits of each claim will often depend on the background events that give rise to it.

How to make a claim for insurance broker negligence

Most claims for insurance broker negligence are commenced by correspondence and by following the procedures set out in the Pre-Action Protocol for Professional Negligence.

The aim of the Protocol is to make the process of resolving professional negligence claims more open and more efficient and, by doing so, to reduce the number of claims that require judicial intervention. Happily, and since the introduction of the Protocol in July 2001, the vast majority of professional negligence claims are now resolved at the Protocol stage and without the need to initiate and pursue costly and time-consuming court proceedings.

However, it is as well to appreciate that as helpful as the Protocol is, it provides only a generic framework for resolving professional negligence claims. It does not identify or assess what facts, issues or evidence is relevant and irrelevant in any particular case, nor does it contain legal advice.

The advantages of instructing a solicitor

You are not obliged to instruct a solicitor to advise and represent you in a claim for insurance broker negligence, but it is usually sensible to do so. Professional negligence claims against insurance brokers are often complicated and time consuming and a successful outcome can very much depend on the way in which a claim is prepared and pursued.

To help you decide between instructing a solicitor and pursuing a claim as a litigant in person, we identify and comment on some of the key factors to consider in our guide: Professional negligence claims – Do I need a solicitor?

If you do decide to instruct a solicitor, you would do well to instruct one who genuinely specialises in professional negligence claims. While an ever-increasing number of solicitors claim to undertake work in this niche area, in reality there are very few solicitors who are true specialists. To assist you in identifying the best solicitor to act in relation to your claim, we have highlighted seven key features to consider as part of your search in our guide: Professional negligence solicitors: How to find the best

Compensation for professional negligence

Where an insurance broker is found to be negligent financial compensation, usually in the form of ‘damages’, can be awarded for a wide range of losses. Using case examples, we identify and explain many of the different types of compensation awards available in our guide: Compensation awards for broker negligence

As in other areas of litigation, the true value of any compensatory award is often dependent on the prospect of being able to successfully recover it. Fortunately, in claims for insurance broker negligence, the defending party usually carries professional indemnity insurance to meet all or part of any judgment or award made against it. This represents a significant benefit to claimants, as we explain further in our guide: Professional Indemnity Insurance – A Claimant’s Guide

Even if the firm or practice at fault is no longer trading or has been dissolved, it may still be possible to make a claim and recover compensation. The support available to claimants in these circumstances is explained in our article: Claims against closed professional firms and practices

Mitigating loss in claims for insurance broker negligence

As part of any claim for insurance broker negligence, it is important to consider what action, if any, might be taken to reduce the financial effect of any negligence. This is because all claimants who have suffered a loss are subject to a duty to take all reasonable steps to mitigate that loss and take no unreasonable steps which would exacerbate it. Where this duty is breached, the court is likely to prevent a claimant party from recovering compensation for that loss which it considers was unreasonably incurred.

The duty to mitigate can lead to much confusion and uncertainty, particularly at the outset of a claim, and further guidance on it is available in our article: The duty to mitigate in professional negligence claims

Time limits for claims for insurance broker negligence

There are a number of important reasons for acting promptly when a mistake has been made or discovered. One of these are the time limits that apply to all professional negligence claims.

These time limits can be found in the Limitation Act 1980. In short, they require legal proceedings to be commenced within:

  • 6 years of the date upon which damage or financial loss occurs – section 2
  • 6 years of the date upon which the mistake occurred – section 5
  • 3 years of the earliest date upon which the claimant has both the knowledge required for bringing a claim and the right to bring a claim – section 14A
  • 15 years of the date on which the mistake occurred, even if the time limit prescribed by section 14A has not expired – section 14B

Therefore, where there are grounds for pursuing a claim for broker negligence, a claimant will generally have 6 years from the date of wrongdoing or loss, but may have 3 years from the date of discovery, if later, in which to bring any claim, subject to a long stop of 15 years.

However, while these time limits may appear straightforward in summary form, applying them in practice can be much more challenging. Unfortunately, there are a multitude of cases in which they have been misapplied, not only by lay clients acting as litigants in person but also by solicitors and other lawyers who have themselves fallen into error.

Although limitation is a complicated area of law with a large body of case law relating to it, further information about it can be found in our introductory guide: Time limits for professional negligence claims – FAQs

Funding claims for insurance broker negligence

Before embarking on any professional negligence claim it is imperative to consider how it will be funded. In comparison to other more routine forms of litigation, professional negligence claims can be more complicated, more time-consuming and more costly to resolve.

Fortunately, there are a number of ways to fund litigation. Each has its own advantages and disadvantages and can be more or less suitable, depending on individual circumstances. Further information about these different funding options can be found in our related guide: Fund a claim

Specialist legal advice

If you are contemplating making, or even currently pursuing, a claim for insurance broker negligence and would like to arrange an initial consultation with us, free of charge or commitment, please do not hesitate to contact us on 0800 195 4983 or by email at mail@pnclegal.com.

We have experience of resolving claims against a wide range of professionals.

Using the links below you can learn more about specific professions and some of the common mistakes that give rise to negligence claims against them.