As highlighted by the following legal case involving A-ANOTHER Insurance Broker and their Client Eurokey Recycling:
A-ANOTHER broker was retained by Eurokey to place its commercial insurances including business interruption cover. Eurokeys turnover was stated at £11M. Following a fire at their premises insurers discovered that their actual turnover was £17M and threatened to avoid policy cover by reason of gross under-insurance. Eurokey eventually agreed a settlement with their Insurer which was significantly less than their actual Business Interruption loss and subsequently brought a claim against A-ANOTHER broker for the difference alleging negligent advice and failing to arrange adequate cover.
The judge dismissed Eurokeys claim on the basis that A-ANOTHER broker had provided an adequate explanation of business interruption cover and had no reason to challenge the turnover figures that Eurokey had provided. The judge outlined that the broker is not expected to calculate the sum insured or confirm the indemnity period but must provide sufficient explanation to enable a client to do so.
If you are in any doubt about the adequacy of your sums insured please do speak to your usual LJM contact who will undertake a review with you.