In Maison Jean-Yves Lemay Assurances inc. c. Bar et spectacles Jules et Jim inc.<\/i>, 2016 QCCA 1494, the Quebec Court of Appeal reiterates the broker\u2019s duty to review the building\u2019s replacement value and coverage when renewing the insurance policy for the property.<\/p>\nThe facts<\/h2>\n
The case began in June 2010, when the insured sought to renew the insurance of its building. Following its broker\u2019s recommendation, an appraiser was mandated to prepare; until then, the property was insured for $424,000.<\/p>\n
On July 20th, the broker took notice of the report, in which the replacement value was increased to $565,000. However, since he was leaving for vacation, he asked a colleague to follow up on the file. Unfortunately, no further steps were taken. The building was destroyed by fire on July 23rd.<\/p>\n
Things took a turn for the worst when the insured found out that the appraiser had underestimated the building\u2019s replacement value, and had also forgotten to consider the cost of demolition, and of upgrading to applicable standards. To make things worse, the appraisal was based on the assumption that the whole building was a residential dwelling, whereas the ground floor was for commercial use. The overall cost of demolition and reconstruction totalled $1,003,708.<\/p>\n
While the case was under appeal, the broker admitted that his failure to react when he received the appraisal report constitutes negligence, and he voluntarily paid to the insured the difference between the amount of the actual coverage and the amount that he considers should have been the adequate coverage. The broker filed an appeal because the trial Judge held him liable for all damages disregarding the appraiser\u2019s fault. The trial Judge concluded that the broker\u2019s failure to react to the appraisal report broke the causal relationship between the flaws in the report and the insufficient coverage. Accordingly, only the broker was held liable for $348,032.<\/p>\n
The Court of Appeal, while affirming the insured\u2019s right to compensation, came to a slightly different conclusion. It held that both the broker and the appraiser were at fault and that these faults were contractual, although not simultaneous. Each was the cause for a specific damage sustained by the insured. Failure by the broker to follow up on the appraisal report or to request increase insurance coverage could not exonerate the appraiser from the flaws in his report. While the broker has an obligation to provide information and advice, he is not liable for damages arising from the faulty evaluation of the insured\u2019s property. As such, the Court of Appeal considered that the causal relationship had not been broken and concluded that both the broker and appraiser were liable towards the insured.<\/p>\n
Finally, the Court confirmed that the broker was to be held jointly and severally liable with his firm. As for the Appraiser, he was solely responsible for his share.<\/p>\n
By Nicolas Drolet, from our Insurance Law Practice Group.
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In Maison Jean-Yves Lemay Assurances inc. c. Bar et spectacles Jules et Jim inc., 2016 QCCA 1494, the Quebec Court of Appeal reiterates the broker\u2019s duty to review the building\u2019s replacement value and coverage when renewing the insurance policy for the property. The facts The case began in June 2010, when the insured sought to […]<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[242,50],"tags":[],"class_list":["post-16670","post","type-post","status-publish","format-standard","hentry","category-insurance-law-en","category-bulletins-en"],"acf":[],"yoast_head":"\n