An insured may rely on advice from a broker, even if he should have known that the advice was inaccurate.
An insurance broker, who erroneously advised the son of an Insured that he was covered by automobile insurance, was responsible to indemnify the son for damages suffered in an automobile accident, despite the fact that he was not insured.
Here is the citation: Issel v. Melville Agencies (1974) Ltd.[2007] S.J. No. 385. Saskatchewan Provincial Court. Green Prov. Ct. J. July 27, 2007.
Here is a link to the decision.
This case was originally edited by David Pilley.
Brian Issel farmed with his father, Arnold Issel, in the Melville area. His father purchased an air seeder in Fargo, North Dakota. To facilitate picking up the equipment, he rented a truck (the “Vehicle”) from Wheat Country Motors in Regina. Brian Issel planned on driving the Vehicle to pick up the air seeder. The owner of the Vehicle required confirmation that Brian Issel had insurance to drive the vehicle before he would rent it. Brian Issel had no vehicle insurance at that time. He was aware that his father had motor insurance (the “Policy”), and was aware that he was not covered under that Policy. Brian Issel contacted Brent Paidel, an insurance broker at Melville Agencies. As a result of the discussion between the two, Brian Issel understood that he did not need to purchase insurance because he would be covered by the Policy. Brian Issel drove the Vehicle and was involved in an accident.
He commenced an action against his father’s automobile insurer and Melville Agencies to recover the damages associated with the accident. At the trial, Mr. Paidel testified that he had no recollection of speaking with Arnold Issel, but believed that what he would have done in the circumstances was read from the insurance booklet issued by the Saskatchewan General Insurance Company. The advice contained in the insurance booklet says that the sibling of an Insured is covered under the policy for rental vehicles if they are driving with the consent of the Insured. Mr. Paidel agreed that in the circumstances he would not have told Arnold Issel that he was not covered under his father’s insurance Policy as he had no knowledge of the specific circumstances of the Policy. Mr. Paidel said that he receives a number of general insurance inquiries on the phone and it is not his practice to provide anything but the advice provided by the insurance booklet.
Green Prov. Ct. J. determined that Brian Issel had no claim against his father’s automobile insurance company, but that he had a valid claim against Melville Agencies. Green Prov. Ct. J. determined that Mr. Paidel owed Brian Issel a duty of care, and that he breached that duty of care by failing to advise him that he was not covered under the Policy for rental purposes. The insurance broker was found to be responsible for the loss, despite the fact that Brian Issel was aware that he was not covered under the Policy before he spoke with the broker.
