Gallagher sued for negligence and breach of contract over failure to cover flat block

Paradigm has claimed for damages, interest and costs and alleged that Gallagher failed to arrange cover for one of its buildings in a recent court filing.

The claimant suggested a number of breaches from Gallagher led to the building in Slough being uninsured when it was hit by a storm in 2020 and had its roof blown off.

The breaches allegedly include:

• Breach of duty
• Breach of ICOBS rules
• Failure to perform or clarify instructions
• Failure to obtain cover as stated in its own renewal report
• Failure to report absence of cover to Paradigm
• Failures in relation to the 2019 quotation
• Failures to effect insurance meeting Paradigm’s needs and expectations
• Failure to correct advice regarding insurable interest

Paradigm had used Gallagher as its broker across its property portfolio since 2004 and, since 2008, cover was provided by Aviva underwritten by Gallagher subsidiary Pen Underwriting. The cover had been provided for the Slough building on a leaseholder basis.

Freehold

The broker is alleged to have told Paradigm that it could not find freehold cover for the flat block due to the freehold being passed to The Crown after the original freeholder went bust in 2012. The Crown is not expected to find cover for the freeholds in its possession so Paradigm asked Gallagher if it could help.

In the court document it is stated that the legal team wrote that at that time Gallagher told Paradigm that it could not obtain insurance for the freehold because the housing organisation did not have an insurable interest in the property. The claimant alleged that this advice was “incorrect” and simply indicative of the position adopted by Pen/Aviva.

Instead, Paradigm got cover for the building between 2013 – 2019 via Towergate Risk Solutions.

Paradigm stated in the particulars of claim, filed with the High Court, that it periodically enquired about insurance for the freehold of the building as it wanted to bring its insurance under one broker. Gallagher continued to say the insurance was not available.

Meeting

The document goes on to state that, in September 2019, ahead of its annual property policy renewal in December, Paradigm again asked Gallagher if it could arrange for the insurance of the freehold interest in the property, the legal document stated. It alleged that a meeting took place between Paradigm and Gallagher and it was agreed Gallagher would place the freehold and the flats on cover from the date of the portfolio renewal. As such, Paradigm asked Towergate not to renew its policy.

However, Gallagher later provided a quote that did not include the property in question. Paradigm claimed that Gallagher had not obtained a quote for the building.

Aware

In the particulars of claim Paradigm stated: “Gallagher was, or ought to have been, aware that upon renewal Pen/Aviva were not intending to provide any cover for the property. Nor, due to Gallagher’s failure to procure the same, had Pen/Aviva even sought to provide quotations for any cover in relation to the properties. Gallagher did not inform Paradigm of these matters.”

The filing continue accusing Gallagher of failing take further steps to procure insurance from Pen or Aviva or the wider market prior to the losses incurred by the storm in 2020, Paradigm accused.

The property was damaged by a storm on 14 January 2020 and had its roof blown off. Following the event, insurance was placed by an alternative broker with RSA.

The proceedings continue and Gallagher is yet to file a response.

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