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The claimant had taken out insurance for a yacht valued at £13 million which was renewed annually. Four years later the broker instructed a sub-broker and £13M was submitted on the proposal form without consulting with the claimant. When the yacht was damaged, the insurer declined to pay £13M as there was evidence to show that the claimant believed that it may be worth £7M to £8M.
Leggett J found that had the insurers been aware of the true information they would have never insured the yacht for £13M. The representation was untrue but had not induced the insurer to enter into the contract. The broker was negligent in not checking with the claimant what the value of the yacht was at the time the sub-broker was asked to place the insurance. Judgment was awarded to the claimant for £2M for the increase in value cover which it would have received had the insurer not avoided the policy.
Brokers should be wary of changes in valuations and it is imperative that material information is checked with policyholders before submitting to insurers. Status quo should not always be assumed and particularly with the new obligations in place under the Insurance Act.
The concept of Assumption of Responsibility is on many stakeholders’ minds at the moment following the Supreme Court decision in CN & GN v Poole.
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The much anticipated revision of the discount rate has arrived with the Lord Chancellor, David Gauke, announcing that it will be fixed at -0.25%.
The UK court has recently clarified the law in relation to causation and loss in broker’s negligence claims in the case of Dalamd Limited v Butterworth Spengler Commercial Limited [2018] EWHC 2558.
Caine Steven John Ellis v Paul Kelly & Violet Ellis (2018) highlights the challenges and sensitivities in alleging fault on the part of a child and parent in circumstances where the primary cause of an accident rests with a third party.
Senior Associate
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