Insurance Broker Liable for Damages in Flood Protection Case
In a significant ruling, the Regional Court of Hamburg has held an insurance broker liable for damages. The court ruled that the broker must pay compensation to a security company for failing to provide adequate insurance coverage, including flood protection. This case, decided on September 9, 2021 (Case No. 413 HKO 27/20), sets a precedent for brokers' duties and liabilities.
The security company had sought to hold the broker accountable for their failure to include flood protection in the car insurance quotes they provided. The court agreed, stating that the broker's duty extends beyond merely arranging insurance. They must provide 'individual and risk-adjusted coverage' and inform clients about their efforts, even if not asked.
The broker's negligence in not securing flood protection coverage led the insurer to refuse liability when a flood occurred. The court ruled that the broker's breach of contractual duties, even if unintentional, made them liable for the damages caused. This decision underscores the importance of brokers' responsibilities in ensuring clients are properly insured against all relevant risks, including those covered by progressive insurance and other providers like allstate.
The Regional Court of Hamburg's ruling serves as a reminder to car insurance brokers of their obligations. They must monitor insured risks, inform clients about new circumstances, and provide tailored car insurance quotes and coverage. Failure to do so may result in liability for damages, as seen in this case. The security company's successful attempt to hold the broker accountable has set a clear precedent for the industry.
