Broker liable for underinsurance of BI cover

An insurance broker was liable for negligent advice arising from underinsurance of business interruption cover following a fire. The broker failed to advise that the method of calculating insured gross profit was different under the proposed policy from its normal accounting practices. After a fire, it became clear that there was there was significant underinsurance for business interruption. A claim was therefore brought in negligence for the difference between what the insurance policy paid out, applying average, and what it would have paid out if the insured gross profit had been correctly declared and calculated in the proposal form. There was also a claim for loss of profits.