To sue a broker an insured must prove on a balance of probabilities that he or she would have purchased additional insurance.

The insured’s motion for summary judgment against his broker was dismissed. The insured alleged his broker failed to properly offer optional income replacement benefit coverage as part of his automobile insurance policy. The Court found that although the broker had breached the applicable standard of care, the insured had not shown on a balance of probabilities that he would have purchased the income replacement benefit coverage if it had been properly offered.

Zefferino v. Meloche Monnex Insurance Co., [2012] O.J. No. 57, January 9, 2012, Ontario Superior Court of Justice, R.B. Reid J.


The insured was injured in a motor vehicle accident and as a result of his injuries he could no longer be gainfully employed. Subsequently, the insured commenced an action against his broker for allegedly failing to properly offer optional income replacement benefit coverage as part of his automobile insurance policy.

At the time the policy was sold, the broker was in the business of selling insurance by telephone to customers within certain organizations. The insured purchased an automobile insurance policy in September 2003 and renewed the policy in 2004.

The broker’s sales representatives used a standard script in their conversations with potential customers and the broker had records of conversations with the insured and his wife. The records indicated that optional benefits were refused in two conversations between the insured’s wife and the broker’s representative in September 2003. In February 2004, the broker’s sales representative recorded the following when discussing a vehicle change:

Discussed coverages. Clt chose to keep cov same.

In November 2003, an amendment to section 27(1) of the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 made the offer of optional income replacement benefits mandatory.

It was undisputed that the broker’s representative did not engage either of the plaintiff or his wife in a detailed discussion of the income replacement benefits or the additional cost of optional benefit coverage during discussions about the new policy in 2003, the vehicle change in 2004 and the renewal in 2004.

In order to successfully establish a claim in negligence, the insured was required to prove (a) that the broker owed the insured a duty of care, (b) that the broker breached the applicable standard of care and (c) that the insured would have purchased the optional benefits if they were properly offered.

The Court found the broker clearly owed the insured a duty of care. The insured relied on the information provided by the broker, the insured’s reliance was reasonable and the broker knew or ought to have known the insured would rely on such information.

With regard to the applicable standard of care, the Court accepted the insured’s argument that the mandatory nature of the requirement to offer optional benefits meant that the broker had an obligation to explain the optional benefits in such a way that the insured could make a fully informed decision about what to purchase. As a result, the Court found it was insufficient to simply offer the optional benefits without an explanation and a quote as to the additional costs that might be involved. The broker argued the conduct of its representatives was consistent with the industry standard. The Court held that there was a consumer protection purpose behind the need to offer optional benefits and further, general non-compliance with a statutory requirement did not mean that non-compliance was acceptable or sufficient to lower the applicable standard of care.

However, the Court found the insured had failed to prove on the balance of probabilities that he would have purchased the optional benefits if it had been properly offered. The insured had been with four other insurers between 1993 and 2003 and the insured had switched insurers in 2003 because of the low price offered through the broker. The Court found “there [was] no hint of any interest on the part of the [insured] and his spouse in coverage greater than the statutory minimum in any area”. Thus, the Court found the insured’s testimony to the effect that he would have secured additional income replacement benefit coverage had he understood what was being offered not to be credible. In the result, the insured’s action was dismissed.

This case was originally summarized by Aaron D. Atkinson and originally edited by David W. Pilley.

Trackbacks (0) Links to blogs that reference this article Trackback URL
Comments (0) Read through and enter the discussion with the form at the end
Post A Comment / Question Use this form to add a comment to this entry.

Remember personal info?