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AGB Partner, Gord McGuire quoted on the post-pandemic trends in insurance broker E&O claims

On February 13, 2024, Canadian Underwriter magazine published an article titled "The post pandemic broker E&O trend, and how to prevent it", in which AGB partner, Gord McGuire, discusses the post-pandemic trend that many clients' property insurance limits aren't being sufficiently adjusted for inflation and increased building costs, which is exposing insurance brokers to errors and omissions (E&O) claims.

The fundamental problem is that the replacement cost to rebuild a property now more regularly far exceeds the relevant policy's limits, which may have been set before the pandemic, during which building prices increased drastically. Recent cases have demonstrated judicial willingness to place the duty on insurance brokers to ensure their clients have adequate coverage "lest they be deemed negligent for it", Gord explains in the article. 

Gord explains that brokers can owe a specific duty of care to ensure their clients' coverage is sufficient, and suggests three best practices to avoid being held liable for negligence. Brokers should:

  1. Advise clients that it’s important to insure to value;
  2. Advise clients that the broker doesn’t have the expertise to pick a particular limit; and
  3. Recommend the client consider retaining appropriate third parties to determine the rebuild cost.

The risk of liability is significant, as brokers can be held liable for the difference between policy limits and the cost to rebuild, as well as any consequential losses. 

The full article, published by Canadian Underwriter, can be viewed here.

Gord McGuire is a recognized expert in insurance coverage disputes and commercial litigation, trusted by clients with their most complex problems. Gord acts for individuals and businesses in all manner of civil and commercial litigation, with particular expertise in insurance coverage disputes. He also acts in contractual and tort disputes, employment law, real estate litigation, defamation, partnership and shareholder disputes, and professional negligence claims. Gord is a seasoned advocate, having represented clients in several multi-week trials and appeared as lead or co-counsel in over 50 reported decisions in Ontario’s Superior Court of Justice, Divisional Court, and Court of Appeal.