IAG NEW ZEALAND LTD V JACKSON

[2013] NZCA 302, New Zealand Court of Appeal, Justice O'Regan, President, Justice Arnold and Justice Miller, 15 July 2013

Insurance (professional indemnity) - Insurance broker failing to obtain insurance - Broker subsequently fraudulently stating that insurance was in place - Whether exclusion for claims in connection with fraud was applicable

In May 2009 M engaged J to place insurance for them. By oversight J failed to do so, but subsequently he fraudulently assured M that insurance was in place even thought that was not the case. M's house was subsequently damaged in the Christchurch earthquake of September 2010. M commenced proceedings against J and obtained judgment. J's professional indemnity insurers denied liability to indemnify J by reason of a policy exclusion which removed cover for "civil liability in connection with any dishonest, fraudulent, criminal or malicious acts or omissions by you". The Court of Appeal held that J had acted dishonestly, and that his dishonest acts were "in connection with" his civil liability. Had J not hidden the truth from M, they would have obtained cover before the earthquake, and that was a sufficient causal nexus between the fraud and the loss.