Minding The Gap: A Cautionary Tale For Insurance Brokers

The Ontario Superior Court of Justice recently allowed a motion for summary judgment against an insurance brokerage and the individual broker for failing to meet their duty of care to arrange adequate insurance coverage.¹

The insured was involved in a motor vehicle accident while operating his leased vehicle. The vehicle carried $1 million in primary limits under a policy issued to the lessor. The insured alleged that he had also provided a clear mandate to his broker to ensure that there was umbrella coverage on the vehicle. Although the broker had arranged umbrella coverage with limits of $15 million, the policy language contained an exclusion for long-term leased vehicles. The umbrella insurer had advised the broker about this exclusion but the broker had failed to advise the insured. After the motor vehicle accident, the umbrella insurer relied on this exclusion to deny coverage.