Answer: I hope that your insurance brokers and/or insurers have come to their senses during the last three weeks. They have apologised and, more important, settled your fiancée's claim for $3.3 million, minus the policy deductible. There are absolutely no sane or valid reasons for them to do otherwise. The law is entirely on your side.

SECTION 82 PROTECTION

You are protected by The Insurance Act, 2001. Section 82 (1) says a broker "shall, for the purpose of receiving any premium for a contract of insurance, be deemed to be the insurer's agent and, notwithstanding any conditions or stipulations to the contrary, the insurer shall be deemed to have received any premium received" by the broker.

The lawmakers did not stop there. Subclause (2) continues: "An insurer on whose behalf a broker has received a premium or part thereof, shall accept liability arising under the policy, notwithstanding that the insurer has not received the premium."

The non-submission of the valuation to the insurers by the brokers is a red herring. The important thing is that you paid the premium to the broker. The premium was calculated on the estimate of value of $3.3 million, based on the valuation.

The broker is "deemed to be the insurer's agent," according to sub-section one. Having 'received a premium' based on the higher value (via its agent, the broker), I do not see how the insurer can legally refuse to pay the claim.

When the lawmakers drafted Section 82 of the act, I believe that they did not have cases like yours in mind. It was primarily intended to protect consumers from brokers who collected premiums but did not pay them over to insurers.

One of the unintended consequences is that insurers have less wriggle room in cases like yours.

BROKERs TO BLAME

The brokers need to accept some of the blame for the problem. In a well-managed firm, the valuation would have been scanned and emailed to the insurers within days after you gave it to the brokers and paid part of the additional premium.

When insurers made the offer of settlement of $1.7 million in May, the brokers should have been aware that that was a mistake. By then, you had paid the balance of the premium for coverage for $3.3 million. Finally, they, like the insurers, appear to be ignorant about Section 82.

Brokers wear two hats in transacting insurance business: They are mainly agents of their clients; in other cases, they wear a different hat as the agents of insurers. An example of this is when they issue a motor-insurance cover note. Another is when they collect premiums. This is done on behalf of insurers.

When brokers make mistakes in discharging their main job - carrying out their clients' instructions - or omit to carry out those duties and the clients suffer financial losses, they can be sued for negligence.

Tell your brokers about Section 82 of the act. Ask them to negotiate settlement for $3.3 million. If that approach does not work, find a young, hungry and aggressive lawyer. Instruct him/her to sue the insurance company and/or the broker to recover your fiancée's money. Best of luck!

Cedric E. Stephens provides free, independent information and advice about risk and insurance. Email: aegis@cwjamaica.com