The duty to notify of non-renewal and broker liability

In a September 2025 judgment, a US Appellate Court in Connecticut confirmed that brokers have no legal duty to warn clients about an insurer’s nonrenewal unless the broker agreed to assist with renewal.

The position is different in South Africa. Under the Financial Advisory and Intermediary Services Act, brokers must be authorised to act as financial services providers with specific obligations under the Code of Conduct to provide clients with “any material contractual information” whenever reasonable and appropriate to do so. Brokers who procured insurance for clients which is about to lapse have a duty to advise clients and take instructions about future cover.

In the US judgment, a homeowner’s policy was procured through a broker fifteen times from 2001 to 2017 and after 2019. Following an inspection, the insurer required repairs and later flagged the policy for nonrenewal absent proof of repair. The insurer sent the nonrenewal notice to the insured. The policy then expired without renewal. After expiry, the home was destroyed in an accidental fire and cover was denied. The insured sued the insurer and the broker, alleging that the broker negligently failed to notify them of the impending nonrenewal.

The court considered:

• whether the broker owed a legal duty to notify the insured of the insurer’s communications about repairs and non-renewal;
• whether a long-standing relationship between broker and client created a special, continuing duty; and
• whether the insurer’s statutory obligation to notify the insured displaced any broker duty. 

The court reaffirmed the general rule in Connecticut that once a broker has procured the requested cover, the broker’s mandate ends. In Connecticut there is no duty to notify the insured of nonrenewal, and a broker may rely on the insurer’s statutory or contractual obligation to notify the insured directly. A duty only arises where the broker agrees to assist with renewal or to maintain cover.

In this instance, there was no evidence that the broker agreed to assist with renewal, continued to act on the client’s behalf, or took steps consistent with managing the renewal. The longstanding relationship alone did not create an extended agency relationship or duty. Judgment for the broker was upheld.

This is materially different from the South African position. In Lenaerts v JSN Motors (Pty) Ltd and Another 2001 (4) SA 1100 (W), for example, the court found that a broker’s duty to exercise reasonable care and skill “extends to the duty to take reasonable steps to elicit and convey material information both from and to the insured”. Brokers’ obligations are heightened under the FAIS Code of Conduct. Brokers who provided advice to a client or are rendering ongoing financial services to a client must provide the client with a written statement on a regular basis identifying the products where they are still in existence with current details about the products. Brokers are excused from this obligation only “where the client is aware, or ought reasonably to be aware, that the provider concerned does not render or has ceased rendering ongoing financial services in respect of the client or the products concerned.” The duty is undeniable if the broker has continued to receive commission for the policy. 

Deer v. National General Ins. Co.