Supermarket recovers £1m fire damages against insurance broker

A supermarket has been awarded more than £1m damages from a broker that failed to give proper advice when setting up a fire insurance policy.

The case involved the supermarket Pakeezah Meat Supplies, which sought advice from Total Insurance Solutions about a policy to cover fire damage at its premises.

Total set up the policy, but when fire then destroyed the building, the insurance company refused to pay out.

It said that Pakeezah had misrepresented the number of fryers on the premises, and that it had failed to disclose previous financial difficulties faced by the directors when they were at other companies.

Pakeezah claimed that Total, which went into liquidation, was responsible for the failures to disclose because it had not taken proper instructions, and that it had failed to identify that the amount of cover should have been higher.

The issues were whether Pakeezah’s directors ought to have known about the disclosure obligations and whether they would have disclosed matters if the broker had given them proper advice.

The court found in favour of Pakeezah. It held that if the broker had advised the directors properly and asked the right questions, the correct information would have been given to the insurers, including about the higher number of fryers.

There was no basis not to accept that evidence. If the broker had performed its duty, the directors would have accurately disclosed all relevant matters to the insurer.

The court assessed the compensation due to Pakeezah at more than £1m.

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