In the recent matter of Jolicoeur vs. Rivard Assurances générales inc., 2023 QCCS 1685, the Superior Court analyzed the professional liability of an insurance broker and his brokerage firm, to determine whether they should indemnify plaintiffs for a penalty of $171,463.08 applied by the insurer due to the increased risk of fire discovered following a fire.
The facts are quite simple. On May 30, 2018, plaintiffs met with defendant broker, Katy Savard, at the brokerage firm Rivard Assurances générales inc. to take out an insurance policy for their duplex and another property. During this meeting, Ms. Savard fills out an online form that contains a list of questions for the insurer, L’Unique, Assurances générales. One of the questions relates to the distance between the duplex and the nearest fire station. The system offers a choice of two answers, namely if the building is located at more than 8 kilometers from the fire station or at less than 8 kilometers from the fire station. The evidence at trial shows that plaintiffs respond verbally to the question by indicating “approximately 30 minutes”, without mentioning the actual distance. In the online form, the answer “less than 8 kilometers from the fire station” is selected.
On July 31, 2019, a fire occurs and completely destroys the duplex. After noticing that the building is located at more than 8 kilometers from the station rather than the contrary, L’Unique, the insurer, applies a 44% penalty to the insurance indemnity paid, representing an amount of $171,463.08 that plaintiffs are now claiming from the brokerage firm and broker Savard, alleging professional misconduct by the latter.
At trial, defendants argue that it was plaintiffs’ obligation to make sure the information being communicated was accurate and that the declarations contained in the policy were in accordance with the facts declared. The Court did not retain their arguments, being of the opinion that minimal verifications could have been done by Ms. Savard, namely by using Google Maps to validate the distance between the duplex and the fire station, based on the travel time indicated by plaintiffs. The Court reiterates that an insurance broker must use his judgment and look for any relevant information before recommending insurance coverage to his clients, especially if they are not known to the broker. Justice Dufresne therefore concludes that Ms. Savard is liable for the erroneous answer given to the insurer L’Unique, stating that she was negligent in selecting the option “less than 8 kilometers from the fire station.” The Court therefore condemns the brokerage firm and its broker, solidarily, to pay $171,463.08 to plaintiffs.
This judgment is an important reminder that the obligation of the insured to declare to the insurer the circumstances relevant to the risk assessment has limits. An insurance broker cannot hide behind vague or incomplete information given by his client without making the necessary verifications, otherwise his professional liability may be triggered.
Patricia Baram is part of our Professional Liability Team with, amongst others, Marika Douville and Laurence Gauthier, partners at the firm.