Nove has represented UAB DK PZU Lietuva's Estonian branch in a dispute between a policyholder, an insurance broker, and a professional liability insurer regarding the question of who shall bear the responsibility for underinsurance (and is obliged to compensate the amount of indemnity left unpaid by the insurer) in property insurance.
According to Nove, the Estonian Supreme Court held that a policyholder — as the most informed person of the insurable object — is responsible for expressing the value of the insurable interest of the object. The insurance broker may rely on the experience and expertise of the policyholder, but as a rule, the broker must explain to the customer the significance of the value of insurable interest, the amortization, and their impact to the indemnity as well the check of relevance of the insurable value of the specific object to be insured.
Brokers cannot base their advice merely on indicative or average insurable values used by the insurers.
According to Nove, "the judgment therefore clarifies how the 'know your customer' principle should be followed in practice in an insurance mediation and specifies the duties of insurance companies and brokers also in the light of the new Insurance Activities Act, which entered into force on 1.1.2016."
The Nove team was led by Attorney-at-Law Andrus Kattel.
