A northern Manitoba school district is suing its insurance brokers, alleging their failures left it exposed to uninsured losses after a 2024 fire destroyed one of its elementary schools.
The School District of Mystery Lake filed a statement of claim in Manitoba's Court of King's Bench following a "significant fire" at Thompson's Westwood Elementary School in July 2024, which it says resulted in substantial property damage. The Office of the Fire Commissioner determined the cause was accidental, tied to an electrical failure, and the RCMP file has been closed.
The lawsuit names Hub International and Milnco Insurance Broker Solution Centre as defendants, alleging they provided insurance services under a Manitoba School Boards Association program the district participated in. The district's policy at the time of the fire provided commercial property coverage with a stated limit of just over $260.5 million on a replacement-cost basis, subject to standard terms and exclusions.
The claim alleges the brokers committed "acts, omissions, deficiencies and failures" that caused or contributed to the district's losses, and failed to ensure the program appropriately responded to "reasonably foreseeable risks and exposures." The statement of claim does not specify a dollar amount sought; it describes the district's losses as arising "from deficiencies in the insurance coverage," resulting from the brokers' alleged breaches of duty, negligence, breach of contract, and acts and omissions. Milnco president and CEO Paul Poganiatz said the company had no comment on the lawsuit. Hub International did not respond before publication, CBC reported.
Claims of this kind generally hinge on whether a broker adequately assessed a client's risk and kept coverage limits current as property values changed. According to Preszler Injury Lawyers, Ontario broker-negligence claims can arise when a broker fails to recommend adequate limits, fails to recommend necessary coverage, or fails to explain important policy exclusions or conditions to a client. Preszler Law Alberta notes that underinsurance can develop at the outset of a broker-client relationship if too little information is gathered about a property or its risks, or worsen over time if a policy is renewed without updates as property values rise.
Two prior Canadian cases illustrate how this kind of dispute has actually played out in court - not as binding precedent for the Mystery Lake claim, which turns on its own facts, but as a guide to how courts have approached similar allegations of broker negligence in the past.
In Manitoba, a judge found an insurance brokerage and two employees liable in negligence for failing to obtain replacement-cost insurance on an apartment building as requested by the client. The brokers' submission to the insurer did not clearly request the coverage, and they failed to review the policy documents issued, which provided only actual cash value. After a fire, the insurer paid the actual cash value, and the brokers were ordered to pay the difference between that amount and the property's replacement cost. The case was 4268113 Canada Ltd. v. King et al., 2023 MBKB 35.
In a separate Ontario case, the owner of a three-storey building at 369 Queen St. W. in Toronto sued its broker after the property was destroyed by fire in 2012. The insurer determined the building was underinsured and paid the policy limit. The owner alleged the broker should have advised it to obtain a professional reconstruction-cost estimate before setting the building limit. Available reporting on the case does not specify its final outcome, unlike the Manitoba matter above, which concluded with a specific damages ruling.
