ARTICLE · 15 SEPTEMBER 2012

Professional Indemnity: Broker’s liability for incorrect answers in proposal

Norton Rose Fulbright Australia

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A broker was liable for the total amount of the loss for failing to make reasonable enquiries regarding a relevant risk.

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Barry Richardson

Natalia Kepa

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Kotku Bread Pty Ltd v Vero Insurance Ltd & Anor (2012) 17 ANZ Insurance Cases 61-930

Introduction

In Kotku Bread Pty Ltd v Vero Insurance Ltd & Anor (2012) 17 ANZ Insurance Cases 61-930, a broker was held liable for the total amount of his client's loss for failing to make reasonable enquiries with regards to a risk relevant to the insurer when obtaining coverage for the client.

Facts

The plaintiff (Kotku) operated a bakery in Capalaba, Queensland. On 19 August 2010, a fire destroyed its premises. Kotku claimed indemnity for destruction and damage to its fixtures, fittings, equipment and stock under its insurance policy with the first defendant, Vero. Vero estimated the loss at $2,716,300.

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