When cover goes missing: How a $5.5m oversight became a broker’s problem

What happens when your insurance broker misses a risk? That’s exactly what came under the microscope in Norman Hay plc v Marsh Ltd, where the Court of Appeal revisited the delicate relationship between companies, their brokers, and what happens when cover slips through the cracks.

If you’re an insurance broker: this case is a warning shot.

If you’re a company relying on your broker: it’s a reminder to double-check that your policies do what you think they do.

Norman Hay plc, now in liquidation, sued its former broker, Marsh, for allegedly failing to secure worldwide motor cover. Why? One of Norman Hay’s employees from its German subsidiary was sent to the U.S. for work, hired a car, and was tragically killed in an accident. He was at fault. The other driver, Ms Sage, suffered life-altering injuries and sued Norman Hay in the U.S.

Rather than go to trial, Norman Hay settled for a massive $5.5 million and turned to Marsh to recover the loss. Their argument? If Marsh had arranged proper cover (or flagged the gap), Norman Hay would have been covered for the loss.

In this case, the alleged breach was all about pre-placement failure—Marsh didn’t secure a policy that covered hired vehicles abroad, despite Norman Hay sending employees overseas. According to Norman Hay, that omission left them dangerously exposed.

This wasn’t about failing to act once a claim arose (post-placement), but a planning failure that took place long before tragedy struck.

The Court of Appeal decision clarified the standard of care expected of insurance brokers; Brokers must exercise reasonable care and skill in arranging appropriate insurance based on the client’s needs and the instructions given. This includes identifying and advising on significant risks, even if not explicitly raised by the client. The broker’s duty is shaped by what a competent broker would reasonably be expected to do in similar circumstances.

From the broker’s viewpoint: What should you do?

• Pre-Placement: Ask Better Questions
  If your client’s business involves overseas travel—even irregularly—probe deeper. Do they hire cars abroad? What kind of liability might arise? Don’t wait for them to ask.
• Define Your Role, Document Your Advice
  Make sure clients understand what you’re responsible for—and what you’re not. Keep clear, written records of all recommendations, risk assessments, and declined options.
• Post-Placement: Keep Your Eyes Open
  Even after the policy is in place, stay involved. Monitor business changes and notify insurers of any increased risk or changes in exposure.

For companies: Don’t set and forget your cover

• Before Buying Insurance
  Don’t assume your broker automatically understands all your risk exposures. Clearly communicate changes in operations—especially if you’re expanding internationally or sending staff abroad.
• Review the Fine Print
  What’s actually covered? Is hired car use in another country included? Are employee actions overseas covered under employer liability?
• Post-Placement: Stay in Touch
  If something changes—like a new region you’re working in, or a different way you’re delivering services—let your broker know. You’re jointly responsible for flagging evolving risks.

Final Word: Prevention is cheaper than a $5.5M lawsuit

Whether you’re placing the cover or depending on it, the message is the same: a single oversight—often in the pre-placement phase—can have massive financial consequences.
For brokers, that means digging deeper and documenting everything.
For businesses, that means staying engaged, informed, and proactive.

How we can help

At Cripps, we have extensive experience handling professional negligence claims involving insurance brokers. If you or your business are facing losses due to a brokers failure to arrange appropriate cover, please do not hesitate to contact us for expert advice.