Historically, claims against negligent 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 negligent insurance brokers
Some of the common mistakes that can give rise to successful claims against insurance brokers 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 have been successfully pursued against insurance brokers are available in our article: Successful claims against insurance brokers
How to claim against negligent insurance brokers
Most claims are commenced by correspondence and by following the procedures set out in the Professional Negligence Pre-Action Protocol. While in some cases it may also be necessary to institute court proceedings, a considerable number of claims are resolved without the need to do so.
Even if the negligent insurance broker is no longer trading or has been dissolved, it may still be possible to make a claim and recover compensation. How to claim in these circumstances is explained in our article: Claims against closed professional firms and practices
Answers to many of the important questions we frequently get asked about making a claim against a negligent insurance broker are set out in our guide: Claims Against Insurance Brokers – A Brief Guide
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 against an insurance broker, 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.
Time limits for claims against insurance brokers
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, some of which are easy to miscalculate, are explained in our guide: Time limits for professional negligence claims – FAQs
Specialist legal advice
As professional negligence specialists, we act for clients nationwide to resolve claims against a wide range of professionals, including insurance brokers. As you can discover here, the service and advice we provide to our clients is unique in a number of important respects.
If you 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 firstname.lastname@example.org.