Percy v. West Bay Boat Builders and Shipyards Ltd. et.al.

This was an appeal of a decision in which an insurance broker was found liable for not obtaining the proper coverage for its client, a yacht builder. The issue arose when the builder was sued by a customer after the customer’s yacht caught fire. The customer alleged that the boat was negligently manufactured by the builder. The action by the customer was settled out of court for a substantial sum. The builder sought reimbursement of the settlement funds and of its full legal costs from the broker. The builder alleged that the broker had enticed it away from another broker/insurer by promising "full coverage " at better rates. As it turned out, the policy obtained for the builder by the broker did not provide the same coverage as was provided by the prior policy. Specifically, it did not cover the product liability claim of the builder’s customer. If the prior policy had been in place, the builder would have been covered for this claim. The broker was found liable both at trial and on appeal for failing to properly review its client’s prior policies and for failing to properly advise the client of the exclusions to coverage.