Hamsard One Thousand and Forty-Three Limited v AE Insurance Brokers Limited
[2024] EWHC 262 (Comm)
Infinity Reliance Limited v Heath Crawford Limited
28 November 2023
[2023] EWHC 3022 (Comm)
High Court
A shop sued its insurance broker because the broker gave bad advice about insurance. The shop didn't get enough money when a fire happened. The judge said the broker was mostly to blame, but the shop was a bit to blame too. The shop got some money from the broker, but not as much as it wanted.
Key Facts
- •Infinity Reliance Limited (Infinity), an online retailer, suffered business interruption due to a fire at its warehouse.
- •Infinity's insurance broker, Heath Crawford Ltd (Heath Crawford), advised on a commercial combined policy with Aviva.
- •Infinity was underinsured due to an incorrect calculation of the sum insured, leading to a significant shortfall in its claim.
- •Infinity claimed the shortfall from Heath Crawford, alleging negligence in providing misleading advice on calculating the sum insured, failing to recommend declaration-linked cover, and failing to advise on additional cover for fit-out costs at alternative premises.
- •The court found Heath Crawford liable for negligence but also found Infinity 20% contributorily negligent.
Legal Principles
A broker owes a duty to use reasonable skill and care in obtaining insurance on behalf of the client.
JW Bollom & Co Ltd v Byas Mosley & Co Ltd [2000] Lloyd's Rep IR 136
The broker's duty includes understanding the client's business and insurance needs, recommending sufficient and effective cover, and ensuring the client understands key policy terms.
Various cases including Dalamd Ltd v Butterworth Spengler Commercial Ltd [2018] EWHC 2558 (Comm), Eurokey Recycling Ltd v Giles Insurance Brokers Ltd [2014] EWHC 2989 (Comm), Standard Life Assurance Ltd v Oak Dedicated Ltd [2008] All ER (Comm) 916
The Law Reform (Contributory Negligence) Act 1945 allows for apportionment of responsibility and reduction of damages where a claimant's fault contributes to their loss.
Law Reform (Contributory Negligence) Act 1945
Outcomes
Heath Crawford was found liable for breach of duty in providing misleading advice on calculating the sum insured, failing to recommend declaration-linked cover, and failing to explore the need for additional fit-out cost cover.
Heath Crawford's advice was inaccurate and misleading; it failed to ensure Infinity understood the implications of its choices and the risks involved; it failed to adequately explore Infinity's needs regarding warehouse-related risks.
Infinity was found 20% contributorily negligent.
Infinity carelessly failed to follow even the flawed guidance provided by Heath Crawford in calculating the sum insured.
Damages awarded to Infinity were £2,336,842.
This amount reflects the shortfall caused by underinsurance due to Heath Crawford's negligence, reduced by 20% for contributory negligence. The court did not find that Heath Crawford's failure to investigate fit-out costs led to any measurable additional financial loss beyond that already compensated.
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