A client declines coverage. Must brokers follow up with a recommendation to buy it?

A broker explains an auto insurance product to a client. The client declines to buy the coverage. Does the broker then have a legal duty as an insurance advisor to follow up with a recommendation to purchase the coverage?

Not necessarily, B.C.’s Court of Appeal has ruled.

At least, not when the client has heard the product explained to them several times before, and the client has shown no past or current interest in the coverage.

“I find that an Autoplan insurance broker has a stringent duty to provide customers with information, counsel, and advice about all available insurance coverage to meet the customer’s needs, including UMP [uninsured motorist protection],” B.C. Court of Appeal Justice Christopher Grauer wrote for a three-judge panel in a decision released Aug. 12. “So long as the customer adequately describes their situation, the broker must review the customer’s insurance needs and provide the full coverage requested by the customer.

“However, that duty does not extend to go further and encourage customers to purchase excess UMP. This is particularly the case for customers who have a history of declining excess UMP in the past, who do not make any specific inquiries in response to the agent’s explanation of excess UMP, and who give no sign of a failure to understand the concept of UMP.”

In Carriere-de-Davide v. Westland Insurance Group, a B.C. driver claimed his broker had a legal duty to follow up and recommend excess UMP coverage that he had declined. He was appealing a lower court decision that found a Westland broker had in fact explained the coverage to him, in spite of his insistence that she had not.

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Whistler, B.C., resident Mark Carriere de Davide was riding as a passenger in a Pontiac Grand Am owned and driven by his then girlfriend in July 2016. They were travelling southbound on the Sea to Sky highway that connects Whistler with Vancouver.

About 30 km south of Squamish, the car rounded a curve in a 60 km/h speed zone. The driver oversteered, causing the Pontiac to spin into the northbound lane where it struck another vehicle, a Volkswagen Golf. As a result of the crash, Carriere de Davide was diagnosed with a severe traumatic brain injury, as well as various bone fractures in his neck, shoulder, spine, chest and pelvis. He also sprained his ankle, and lacerated his kidney, liver, spleen, bowel and colon.

Following the collision, Carriere de Davide made a claim for compensation to ICBC. The claim centred on his UMP coverage, since the at-fault motorist, the driver of the Pontiac, had only basic third-party liability coverage of $200,000. ICBC settled the claim for a total payment of $665,356.

Carriere de David sued Westland, claiming the broker he dealt with did not explain or recommend excess UMP, which would have increased his UMP coverage from $1 million to $2 million.

“He argued to the court that if he’d understood he could get an extra $1 million worth of UMP by paying an additional premium amount of just $25, he would have bought it. Since he did not buy it, he presumed the broker must not have offered or explained it to him,” as the Appeal Court characterized his argument.

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The lower court found the broker had followed Westland’s established procedure, guided by a computer, and advised about the purchase of excess UMP coverage of $2 million for a cost of $25 more. Carriere de Davide declined this option, the court found, following which the broker keyed “N” (no) into Westland’s computer system. Carriere de Davide later confirmed his choice to decline this optional coverage when he wrote his initials next to the words “No Excess UMP purchased on this Transaction” on the insurance contract.

The lower court found the broker did not follow up with Carriere de Davide after he declined coverage.

“I do not find that Mr. Carriere de Davide asked [the broker] questions about Excess UMP, or that she elaborated upon her standard explanation of UMP coverage that she habitually gave to clients,” the lower court found. “I also do not find [the broker] made any particular recommendation regarding whether Mr. Carriere de Davide should buy Excess UMP or continue with his Basic UMP coverage.”

Carriere de Davide appealed the decision, saying it was an error for the trial judge to conclude the broker fulfilled her duty as an insurance advisor, since she did not follow up with a recommendation for him to buy the excess UMP coverage.

But in this case, the appeal court ruled, it made a difference whether or not Carriere de David was familiar with the UMP insurance offered by AutoPlan. Both the Appeal Court and the lower court cited that he had heard repeated explanations over the years of how excess UMP worked — and he had declined it each time.

As the trial judge put it, and as paraphrased by the B.C. Appeal Court: Carriere de Davide “was a long-standing customer of Westland’s office ‘who had been offered and declined Excess UMP on multiple occasions’ and who ‘did not indicate either a particular interest in or a lack of understanding of this type of optional coverage.’”

Thus, the Appeal Court rejected Carriere de Davide’s appeal against Westland.  

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.