Earthquakes, Insurance broker and no insurance


An insurance broker failed to place home insurance for homeowners when asked to in May 2009.  The earthquake in September 2010 badly damaged the house.  The broker then unsuccessfully  tried to place the cover with the insurance company and backdate the cover.  The High Court decided that the broker was liable to the homeowners in Marchand & ors v Jackson & anor [2012] NZHC 2893. In Marchand & ors v Jackson & anor [2013] NZHC 1752 the High Court quantified the broker’s liability at $2,686,779.  The broker joined his professional indemnity insurer, IAG New Zealand Ltd, as a third party.  It applied for summary judgment based on the dishonesty exclusion.  The High Court refused to enter summary judgment in Marchand & ors v Jackson & anor [2012] NZHC 944.  The Court of Appeal has now allowed IAG’s appeal and decided that the insurance policy dishonesty exclusion applied.  Had the broker not hidden the lack of cover from the homeowners they would have organised cover.  So the broker’s dishonesty was a causative of the loss.  The Court of Appeal decision is IAG New Zealand Ltd v Jackson [2013] NZCA 302.