Canadian Underwriter

Brokerage E&O 101: How to win lawsuits against evasive clients

July 27, 2022   by David Gambrill

Firemen Putting Out a House Fire Disaster

Print this page Share

Taking notes and attaching them to a client’s file as part of an everyday business practice allowed a veteran broker at Wyatt Dowling Insurance Brokers to win a lawsuit launched by her client over two cars that burned up in a garage fire.

The client insisted he told his broker about the uninsured race cars before filing his home insurance application. But the application didn’t mention the cars, the Court of Queen’s Bench of Manitoba ruled.

What’s more, the client’s fire claim was denied by his home insurance provider, Aviva Canada. The court found the garage had a woodstove in it, which the claimant also did not include in his signed home insurance application.

The court found the broker had asked about the woodstove, and the client replied that there was no heat in the garage. As a result of not telling the insurer or the broker about the woodstove, Aviva denied coverage for the fire.

The broker was victorious in the case largely because she kept notes about her conversations with the client.

“I note that the [broker and the brokerage] maintained a contemporaneous log of discussions and correspondence with the plaintiffs as part of their regular business routine,” Court of Queen’s Bench of Manitoba Justice Jeff Harris wrote in a decision released July 21. “There was nothing special about these clients that caused these notes to be taken – it was simply a good business practice. The plaintiffs did not keep notes.”

In Funk et al. v., 2022 MBQB, Donald Funk met with his broker, Sara Berg, to talk about changing his home insurance policy.

“Ms. Berg says that she specifically asked Mr. Funk about heat sources in the outbuildings on the property and that her general practice is to ask whether any building contained a woodstove or any other source of heat,” the court noted in its decision. “She said she did that in her discussions with Mr. Funk and he advised her that there was no heat in the garage. He did not advise her that there was a woodstove in the garage.”

She also asked Funk if he had “any uncommon or valuable items or collections such as jewelry, bicycles, watercraft or any other high value items,” the court noted. “She does this because a basic homeowner’s policy usually has limits for such items and collections.”

Funk did not declare the two uninsured Dodge Darts on the application form, the court found. He assumed home insurance would cover them, court documents note.

Based on his answers to her questions, and the fact that Funk rejected an initial quote from Red River Mutual, Berg quoted an Aviva policy, which she forwarded to Funk by email. In the email, she wrote: “Please find attached the application for the new policy with Aviva. Please review the application to make sure all information [is] accurate and the limits of insurance are sufficient.”

Funk signed the policy and returned it to the brokerage. There was no mention of the two uninsured Dodge Darts, the court noted.

In December 2019, the Funk’s garage and contents were destroyed by fire. He reported the loss to Aviva who assigned an adjuster to adjust the loss. The adjuster asked Funk questions about the woodstove in the garage.

On Dec. 17, 2019, Funk advised Berg that two uninsured Dodge Darts were destroyed by the fire.

“According to Ms. Berg, this was the first that she had heard about the Dodge Darts,” the court found. “She says that had she known there were uninsured vehicles in the garage when she assisted Mr. Funk in April 2019, she would have advised Mr. Funk of his options for coverage.”

The court found Berg had no reason to inquire about whether any cars were in the garage, given that Funk was seeking a homeowners’ policy.

“In completing an application for homeowner’s insurance, the agent is merely a ‘scribe or secretary’ of the insured,” the court ruled, citing previous caselaw. “The agent ‘is not a private detective who is required to cross-examine his own client as to the answers given on an application.’”

The court also found Funk was evasive in some of his answers when he was cross-examined about the woodstove. For example, he kept insisting on calling it a “workbench” in cross-examination, even as he acknowledged that he used the woodstove as a work bench.

There was also inconsistency in the way he reported the woodstove to the brokerage after the fire. “According to the [brokerage’s] notes of that conversation, Mr. Funk first said that ‘he would have told us about the woodstove and that it was in photos,’” the court observed. “In that same conversation, he later said, ‘he didn’t have tell us of the woodstove as it was disconnected and wasn’t being used.’”

Ultimately, the court found Funk’s testimony was inconsistent and unreliable, whereas the brokerage had a consistent record of their conversations. Berg and Wyatt had thus exercised their proper duty of care owed to Funk.


Feature photo courtesy of