Your insurance broker has a duty to find out all material information that may affect your cover and to explain how failing to disclose such information could affect you.
This includes finding, out for example, whether your home or business premises are thatched, even if you are insuring only your household contents or the stock and assets of your business.
The insurance premiums for buildings with thatched roofs, or for the contents within thatched premises, are generally loaded, because these buildings have a greater risk of being destroyed or damaged by fire than buildings with other roofing material.
A broker should know that one of the material issues that could affect insurance cover is a thatched roof, and that this therefore needed to have been disclosed.
The FAIS Act’s code of conduct stipulates that when Financial Service Providers render advice or a financial service to you, they must give you concise details of any special terms or conditions, exclusions, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided. This is particularly relevant where a policy is being terminated in favour of a new policy.
Such responsibility to elicit this information rested solely with the broker.
LIMITATIONS ON ADVICE MUST BE DISCLOSED
If a financial adviser or a broker is unable to conduct an analysis of your circumstances and give you advice, he or she must ensure that you understand that an analysis could not be performed and there may be limitations on the appropriateness of the advice provided.
Your adviser or broker needs to make you aware that you must take particular care to consider whether the advice is appropriate considering your objectives, financial situation and your needs.