Broker duty of care

Category: Broking concepts · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~6 min read

Where the duty comes from

A broker acts as agent for its client in placing insurance, and the relationship is normally contractual. The contract carries an implied term that services will be performed with reasonable care and skill, and the courts have long recognised a concurrent duty of care in tort arising from the assumption of responsibility inherent in the relationship. The two duties usually produce the same answer, but the tortious duty matters for limitation and for claims by parties who are not the contracting client.

The scope of the duty is set by the retainer. A broker instructed to place a specific cover on specific terms owes a narrower duty than one engaged to review a group's whole programme. The most productive question in a dispute is usually not “was the broker careless” but “what was the broker engaged to do”.

The standard of care

The standard is that of a reasonably competent broker holding itself out as having the relevant expertise. A broker presenting itself as a specialist in a class or a sector is judged by the standard of a specialist in that field. Compliance with ordinary market practice is powerful evidence of reasonable care but is not conclusive; a practice can itself be negligent.

The duty is not a guarantee of outcome. A broker does not warrant that cover will respond, that an insurer will remain solvent, or that the client has bought the cheapest available terms. Nor is the broker generally the client's underwriter: it is not required to verify information the client is better placed to know.

Ascertaining the client's needs

The leading modern illustration is Eurokey Recycling Ltd v Giles Insurance Brokers Ltd [2014] EWHC 2989 (Comm), decided by Blair J on 12 September 2014. The court held that a broker must take reasonable steps to ascertain the nature of the client's business and its insurance needs, and must give a sufficient explanation of the cover for the client to make an informed decision — including, on business interruption, explaining that insurable gross profit is not the same figure as accounting gross profit, and that the indemnity period must be long enough for the business to return to its pre-loss trading position.

But the court also marked the limits. Calculating the sum insured and choosing the indemnity period did not fall within the scope of the broker's duties; the broker's job was to equip the client to do it. And where a client who appears well informed about its own business provides information to the broker, the broker is not himself expected to investigate the position. The claim against the broker was dismissed in its entirety.

The practical reading of that case is that the duty is one of explanation and process, not of doing the client's arithmetic for it — and that a well-run broker documents both.

Advising on disclosure

In Jones v Environcom Ltd [2010] EWHC 759 (Comm), upheld on appeal at [2011] EWCA Civ 1152, the court held that a broker must advise its client of the duty to disclose material facts and take reasonable steps to elicit them, and that generic written warnings buried in documentation are not enough. The broker must satisfy itself that the position is in fact understood by the client, which will usually require a specific oral or written exchange on the topic, both at placement and at renewal.

The claim nevertheless failed, because the breach caused no loss: had proper disclosure been made, no insurer would have written the risk. That is a reminder that a broker negligence claim has three limbs — duty, breach and causation — and that the third is frequently where such claims are decided.

Regulatory duties alongside the common law

A UK broker is also an FCA-authorised firm carrying on insurance distribution, and the Insurance: Conduct of Business sourcebook applies. Among its provisions, ICOBS 2.5 requires firms to act honestly, fairly and professionally in accordance with the best interests of the customer, ICOBS 5.2 requires a firm to ensure a policy is consistent with the customer's demands and needs, and ICOBS 4.4 requires commission disclosure to a commercial customer on request. The FCA's Principles for Businesses sit above these, and for retail customers the Consumer Duty adds a further layer.

Breach of a conduct rule is not automatically negligence, and negligence is not automatically a breach of a conduct rule. But the two overlap heavily in practice, and regulatory expectations increasingly inform what a court will regard as reasonable. A broker's file — demands and needs statements, market presentations, renewal reports — tends to be the evidence in both forums.

Causation, scope of duty and loss

Even where breach is established, the claimant must show that the breach caused recoverable loss. Typically that means proving that, but for the failure, cover would have been available on terms that responded to the loss — sometimes on a loss-of-a-chance basis where the outcome depended on an insurer's decision. Where the risk was uninsurable, or the client would have made the same decision anyway, the claim fails.

The courts also ask whether the loss falls within the scope of the duty assumed — the distinction between giving advice on a course of action and providing information on which the client makes its own decision. That question is dealt with separately in advice versus information.

Why it matters

For a buyer, the doctrine explains what you are entitled to expect: a broker who takes the trouble to understand the business, explains the cover in terms you can act on, tells you plainly what you must disclose, and records what was said. For a broker, it explains what the file has to show. In both directions the theme is the same — the duty is discharged by process and explanation, and disputes are usually won or lost on documentation created long before anyone thought there would be a dispute.

Frequently asked questions

What duty does an insurance broker owe its client?

Concurrent duties in contract and in tort to exercise reasonable care and skill, measured by the standard of a reasonably competent broker holding itself out as having the relevant expertise. The precise scope depends on the retainer and on what the broker was engaged to do.

Must a broker calculate my business interruption sum insured?

No. In Eurokey Recycling Ltd v Giles Insurance Brokers Ltd [2014] EWHC 2989 (Comm) the court held that calculating the sum insured and choosing the indemnity period did not fall within the broker's duties. The broker must give a sufficient explanation of the cover for the client to do it, including how insurable gross profit differs from accounting gross profit.

Does a broker have to explain the duty of disclosure?

Yes. In Jones v Environcom Ltd the court held a broker must advise on the duty of disclosure and take reasonable steps to elicit material facts, and must satisfy itself that the client understands, which usually requires a specific exchange at placement and at renewal rather than generic written wording.

Is a breach of FCA conduct rules the same as negligence?

No. ICOBS and the FCA Principles set regulatory standards and breach can have regulatory consequences, but a negligence claim still requires duty, breach and causation to be proved at common law. In practice the two overlap, and the broker's file is usually the evidence in both.

Related entries

• Broker duty of care to the client
• Broker duty to explain policy terms
• Advice versus information
• Breach of duty of care
• ICOBS and the FCA Handbook

This entry is part of the Apex Insurance Wiki. It states the position as at August 2026. Last reviewed 2026-08-22. Next review: 2027-02-22. It is general insurance information, not legal advice, and not regulated advice on a specific policy.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.