Insurance is a complex product. For motor, home, travel and health insurance, policyholders can buy ‘off the shelf’ cover directly from an insurer. However, particularly for more complicated policies, many policyholders rely on brokers to secure appropriate cover that actually protects them and will pay out when a loss occurs. A broker’s advice shapes the decision on which policy to purchase, the limits selected, and the exclusions that apply.
When a broker’s advice is wrong, it is usually only noticed at the worst possible moment: when you need to claim. Gaps in cover, ambiguous policy wording, broad exclusions, underinsurance, inadequate limits, misclassified risks or administrative errors can leave you uninsured or only partly insured. The financial impact for the policyholder and any third party claimants can be significant, especially where a loss should have been covered had the advice been accurate.
When Does an Insurance Broker’s Work Become Professional Negligence?
If you have had a claim refused or you have discovered that the policy you were sold does not cover what you expected, it is usually worth considering whether the broker is at fault. Professional negligence arises when the broker takes on responsibility for advising you (known as a “duty of care”), fails to act with the skill expected of a reasonably competent insurance broker (referred to as the “standard of care”) and causes you financial loss (so-called “causation”).
What professional negligence means for Insurance Brokers
A claim may arise where the broker:
- Owed you a duty of care, usually because they were engaged to advise on insurance needs, source policies, explain coverage, manage renewals or ensure appropriate protection.
- Failed to act with the skill and care expected of a reasonably competent broker, for example by recommending unsuitable cover, misunderstanding your risks, failing to advise on policy terms or misrepresenting the level of protection available.
- Caused you financial loss, you have suffered losses and those losses would have been covered if a policy had been placed by a reasonably competent broker.
Common examples of how things go wrong
- Recommending unsuitable or incomplete cover
- Failure to advise on key exclusions or conditions
- Underinsurance or inadequate policy limits
- Misrepresenting a risk to the insurer
- Incorrectly completing proposal forms
- Failure to disclose material facts
- Poor renewal management
- Selling policies that do not match the client’s needs
- Not warning clients about gaps in business interruption cover
- Incorrect advice on liability, indemnity periods or rebuild costs
If these issues have occurred, the broker’s performance may not have met the required professional standard.
Do I Have a Claim Against My Insurance Broker?
To understand whether a claim may exist, it helps to look at the key elements that guide these cases.
Important elements
Duty of care
If the broker was engaged to advise you, source cover, explain terms or manage renewals, they owed you a responsibility to act with reasonable skill and care.
Breach of duty
A breach occurs where the broker’s work falls below the standard of a reasonably careful insurance broker. This may involve recommending unsuitable policies, failing to advise on or explain exclusions, mismanaging renewals, overlooking information the insurer required or misunderstanding your risk profile.
Causation
We look at whether the problem you are now facing – usually an uninsured or underinsured loss – stems from a broker’s mistake. If correct advice would have resulted in a policy that covered your situation, causation may be clear.
Loss
Loss in broker negligence cases often arises where a claim should have been covered but was not. This can include third party claims, property damage, business interruption, stock loss, liability claims, fire, flood or theft losses and costs associated with disputes with insurers.
Time limits for bringing a claim
Professional negligence claims must generally be brought within six years of when the cause of action accrued. That is usually when the mistake occurred or when the loss was suffered. In insurance cases, the issue often becomes visible only when a claim is refused or limited.
Because time limits can expire sooner than clients expect, it is important to get advice early.
Frequently Asked Questions
What if the broker says the insurer rejected the claim because of something I didn’t disclose?
This is a common explanation, but it is not always correct. Brokers may have a duty to guide you on what needs to be disclosed, help you understand the effect of omissions and make sure the proposal form reflects the risk accurately. It is important to review your emails, renewal notes and the documentation the broker prepared to see whether the alleged non-disclosure is something they should have identified and advised you about.
Can I bring a claim even if I signed the proposal form or renewal documents myself?
Yes. Signing a proposal form does not protect a broker if they failed to explain important questions, misinterpreted your answers or filled in information on your behalf that was inaccurate. Brokers have a duty to ensure you understand what you are signing and how the information affects your cover.
What if the broker reassured me that everything was covered, but the policy wording says otherwise?
This happens frequently. Many clients rely on what the broker told them, not on the small print. If the broker’s explanation did not match the policy wording, or if they failed to highlight exclusions that undermine the cover, the issue may trace back to the advice, not the policy. We compare the wording with the broker’s recommendations and explanations to see where the problem originated.
How do I know whether the policy the broker found was actually suitable for my needs?
It is important to consider your risk profile, the type of cover you reasonably needed and the options available at the time. If the broker recommended a policy that did not match your actual risks, lacked key protections or contained exclusions that made the cover ineffective, the policy may have been unsuitable from the outset.
What if the broker failed to warn me about underinsurance or incorrect sums insured?
Brokers may have a duty to assist in making sure the appropriate sums insured based on your building value, stock levels, business interruption needs or liability exposures. If they failed to explain the impact of underinsurance, or did not advise you on how to calculate values properly, you may have a claim if a loss was later reduced or denied.
Can I still bring a claim if the loss relates to something very technical in the policy wording?
Yes. Many negligence claims arise from complex wording such as indemnity periods, breach of condition clauses, sub-limits, warranties or notification requirements. Brokers are expected to understand these terms and advise you on how they affect your cover. We examine how technical issues were explained to you and whether the broker should have provided clearer guidance.
What if the insurer says the claim is excluded because of a clause the broker never mentioned?
Exclusions are one of the most common sources of disputes. If the broker failed to explain important exclusions, or if their recommendation ignored important limitations in the policy, it may constitute a failure in their duty to highlight the risks of choosing that cover.
Can I bring a claim if the broker mishandled a renewal?
Yes. Renewal errors are a frequent cause of loss. If the broker allowed cover to lapse, failed to update the insurer about changes in your circumstances, or did not warn you about new exclusions, you may have a claim.
Do I have a claim if the broker arranged cover with the wrong insurer or policy type?
Possibly. A broker must match your risks with the appropriate policy type and a reputable insurer. If they placed your cover with an unsuitable product or recommended a policy that does not correspond to the risks you face, this may point to negligence.
Next Steps
If you have had a claim rejected by your insurer and you think it is because of something your insurance broker did or failed to do, please do get in touch. We take some claims on a contingent fee basis.
You can reach us at gms@goodmurraysmith.ie or +353 1 764 4100.
If you would like a wider overview of how we handle professional negligence matters across all sectors, you can return to our main professional negligence Professional Negligence page.
Disclaimer: This guide provides a general overview of issues in claims against insurance brokers. It is not exhaustive and should not be used as a substitute for professional legal advice. You should always seek professional legal advice for your specific circumstances.