Is the FCA test case just the first wave of insurance-related claims on business interruption (BI) cover? Will there be a second wave of negligence claims against insurance brokers? We consider these questions in further detail.
There are many businesses that do not benefit from the Supreme Court decision on business interruption (BI) – particularly those that do not have (BI) insurance cover that responds to the Covid-19 pandemic or have had their claims rejected. . Those businesses will now undoubtedly be asking themselves – ‘why?’
Why didn’t the insurer broker offer cover or adequate cover? Is the broker ultimately at fault given that it is their responsibility to ensure that a policy insures against specific risks, provides adequate cover and so on? Did the insurer fail to assess and effect cover that met my business’ needs?
Whether or not these issues will give rise to a professional negligence claim against an insurance broker will very much depend on each case and the scope of instructions given to the broker. For instance, key considerations will be whether the broker was undertaking an advisory role in arranging cover and whether they should have provided an opinion about the scope of cover. There will also be disagreements over whether the business or organisation would have taken out the additional and possibly more expensive cover had they been offered it.
A number of unanswered questions remain, but what is clear is that an increase in claims against insurance brokers is anticipated – particularly relating to insurance policies taken out in late 2019 or early 2020 when the current pandemic started.
In situations where businesses are not covered by BI insurance, it may make sense to assess whether they could raise a claim against their broker.