Brokers have duty to inform clients of insurance options

Insurance brokers have a duty to make sure clients are aware of all possible coverages and the associated costs, Toronto critical injury lawyer John McLeish says.

“There have been significant cuts to auto insurance benefits over the past couple of years and some of the protections of a basic auto insurance policy have been stripped away,” says McLeish, a partner with McLeish Orlando LLP. “As a result, brokers should have an obligation to inform clients of optional uninsured and underinsured insurance coverage when clients’ policies are up for renewal.”

McLeish says a good example of a case people can relate to is the 2018 Yonge Street van rampage.

“In this case, the insurance company for the rental truck company is going to pay out, but no one yet really knows the amount. There were more than 20 people killed or injured. If each claim is worth $500,000, for instance, and there is only $1 million in insurance, victims without underinsured insurance are going to receive 10 cents on the dollar.”

Sue for difference

However, he says that if the victims of the attack had been advised by their brokers to purchase additional uninsured or underinsured auto insurance coverage, they could sue for the difference

“For example, if I’m driving and someone in another vehicle strikes and injures me, but they only have $200,000 in liability insurance, and I have $1 million of insurance on my own car, I can make a claim against my own insurance company. If my case against that driver is worth $500,000, I can automatically include my own insurance company in the claim for the $300,000 difference based on the underinsured coverage,” McLeish explains.

He says the additional coverage is usually available for a very nominal cost, yet brokers are not always informing their clients of this extra protection.

“Brokers have a duty to make sure clients purchase insurance that fits their needs and the needs of their families. This includes underinsured insurance at a very cheap cost.

“If a broker does not live up to this duty, and a client with insufficient insurance is injured or killed, the broker may be liable for the shortfall in coverage,” he adds.

“It is going to be very interesting to see what brokers are included as defendants in the rental truck case, for not advising their clients to purchase underinsured insurance,” says McLeish.