The facts of Bronfman v. BFL Canada Risk, (2013) ONSC 5372 appear to be taken from the script of a Hollywood movie. In November 2008, thieves broke into Paul and Judy Bronfman’s home while they were out for the evening. Not bothering to fuss with trying to open a safe located on the second floor of the home, the thieves opted instead to take the entire safe. The safe contained expensive jewellery, $50,000.00 in cash and other valuables, including two 1970s-era Montreal Canadiens Stanley Cup rings. The thieves were never apprehended and the valuables were never recovered.
Upon notifying their insurance broker of the break-in, the Bronfmans were informed that their available policies provided for $20,000.00 in coverage for jewellery and $1,500.00 for cash. Left out-of-pocket and uninsured for most of their losses, the Bronfmans engaged legal counsel and headed to court.
Five years later, they won their legal battle at trial. The central question before Madam Justice Stewart was the scope of an insurance broker’s duty to ensure that the client’s insurance adequately covers their needs. Ultimately, Justice Stewart found that the Bronfman’s insurance broker was negligent in failing to adequately review their needs and advise as to suitable coverage.
In 2004, the Bronfmans had switched brokers. In early 2005, the new broker sent a letter to the stating, “All documentation has now been received from [the insurer] and we will be contacting you shortly to review the present coverage for both the house and cottage prior to the anniversary date of April 1st.” Unfortunately, and perhaps one of the key facts at trial, the new broker did not in fact meet with the Bronfmans nor did he undertake a review of their coverage as set out in his letter.
Mr. Bronfman stated that he always believed that their contents insurance also applied to their jewellery. He testified that he paid little or no attention to the covering letters he received with renewals of the underlying policies.
In her trial decision, Justice Stewart considered the case law setting out an insurance broker’s duty to his client. An insurance broker is required to use a reasonable degree of skill and care when asked to obtain a specific type of coverage and to inform the client promptly if such coverage is not available. If the client provides no specific instruction on the type of coverage required and instead relies on their broker, the broker - if he agrees to act on such terms - must inform himself of the client’s circumstances in order to assess the foreseeable risks and to insure his client against them.
Justice Stewart held that the broker did not meet with the Bronfmans to discuss their insurance needs and coverage, nor did he review the nature of their personal property or tour their home. In sending out generic renewal letters, the broker had operated mechanically and only did the bare minimum with little consideration of their insurance needs. Counsel for the broker argued that a standard form letter can discharge an insurance broker of their duty of care: however, Justice Stewart was not persuaded in the circumstances given that the broker was aware of the Bronfmans’ wealth and lifestyle.
Justice Stewart also held that if the Bronfmans had been advised of the gap in their insurance coverage, they would have taken steps to purchase such insurance and would have obtained all necessary appraisals. This conclusion was based on the finding that the Bronfmans could easily afford to pay the additional premiums for increased coverage, and to do so would be the sensible and reasonable course of action in their circumstances.
The Bronfmans were awarded damages equal to the extent of coverage that they likely would have obtained had they been properly advised of its availability, less the cost of purchasing insurance coverage.
The decision is currently under appeal, and we will watch for the result with interest. In the meantime, insurance brokers should be wary of relying on simple form letters setting out insurance coverage as a means of fulfilling their professional duties. Brokers would be wise to investigate any obvious coverage gaps, and follow through on any offers made to review clients’ coverage in greater detail.