An Insurance Brokers Duty of Care

An Insurance Broker has a contractual ‘duty of care’ to their client and should consider the best types of cover for their client.   

When considering policy covers,  the Insurance Broker should be familiar with the policy wordings contained in the Product Disclosure Statement (PDS).  It is always prudent for the Insurance Broker to refer their client to the PDS, particularly if they are providing 'general advice' only.

The Insurance Broker will also need to be mindful that it’s not only the information contained in the PDS, but also the information contained in the schedule of insurance which should be checked thoroughly, to ensure it meets their client’s requirements and that no errors have been made when processing.

For example, the PDS may make a broad reference to policy excesses, however the schedule of insurance will most likely provide specific details of the applicable excesses.

Therefore, an Insurance Broker must ensure a ‘duty of care’ and be obligated to act ethically and in good faith when acting for their client.