Britam Sued For Refusing to Pay Sh10 Million Insurance Claim

A Nairobi-based law firm has moved to court seeking damages after Britam General Insurance (K) Limited allegedly reneged on its commitment to honor a Sh10 million professional indemnity insurance policy, leaving the lawyer to personally settle a Sh1.3 million claim.

Musyoki Benson & Associates Advocates, through its managing partner Benson Musyoki Nzakyo, has filed a lawsuit at the High Court accusing the insurance giant of breach of contract and acting in bad faith when it declined to indemnify him against a third-party claim that arose from his legal practice.

The dispute centers around a professional indemnity policy numbered 580/053/1/001/905/2021/07 that Britam issued to Mr. Nzakyo after he completed a proposal form and paid the required premium.

According to court documents, Britam confirmed on July 20, 2022, that it had insured the lawyer and issued him with a certificate of cover for the year commencing 2021.

The legal battle stems from a property transaction that went awry.

Mr. Nzakyo had represented John Matiti Kithendu in the purchase of a 0.040-hectare property in Diani, Kwale County, from Stephen Chebor Kipkemei Kipkebut, who trades as Baimet Contractors.

As part of his professional duties, the lawyer issued an undertaking to pay the balance of the purchase price of Sh1.3 million within 14 days.

However, complications arose when Mr. Nzakyo assisted his client in transferring the property title before the full payment was made.

When he subsequently delayed in completing the purchase price payment, John K. Kibet of Oruenjo Kibet & Khalid Advocates sued him at the Milimani Law Courts, seeking to enforce the professional undertaking dated January 28, 2022.

Upon being served with the lawsuit, Mr. Nzakyo immediately notified Britam and requested indemnification in accordance with the terms of his insurance policy.

Initially, the insurer appeared cooperative, accepting the claim and demanding the policy excess of Sh50,000, which the lawyer paid in full.

Acting under the doctrine of subrogation, Britam accepted the claim and appointed Messrs Ako & Co. Advocates to represent Mr. Nzakyo in the matter.

However, the arrangement was short-lived. According to the court papers, the appointed law firm later declined to continue with the case and allegedly instructed them to cease acting in the matter.

Mr. Nzakyo argues that Britam failed to identify or cite any clause in the policy document or proposal form that excluded conveyancing practice or professional undertakings, which he maintains are routine activities within the legal profession.

Left without legal representation and facing potential professional consequences, he was compelled to personally settle the third-party claim.

The lawyer paid a total of Sh1.3 million as the outstanding purchase price and an additional Sh100,000 in legal costs.

The matter was subsequently marked as settled through a consent agreement dated March 1, 2024, but Mr. Nzakyo was left significantly out of pocket.

In his court filing, Mr. Nzakyo describes Britam’s actions as “unmerited, unreasonable, and constitutes a fundamental breach of the contract.”

He further alleges that the insurer’s conduct violates Section 80 of the Insurance Act, which prohibits misleading or ambiguous policy documents.

The lawyer accuses Britam of acting in bad faith and engaging in corporate impunity while making an unjustifiable attempt to avoid its lawful obligations under the insurance contract.

He maintains that the refusal to honor the policy terms has caused him significant financial loss and damage to his professional reputation.

As a result of Britam’s alleged breach, Mr. Nzakyo seeks several remedies from the court.

He wants the court to declare the insurer’s repudiation of his claim as unlawful, unreasonable, and constituting a breach of contract.

He is also seeking compensation totaling Sh1.45 million, which includes the Sh1.4 million he paid to settle the third-party claim and the Sh50,000 policy excess that Britam has allegedly withheld despite repudiating liability.

Additionally, the lawyer is requesting that the court order Britam to pay interest on the sum of Sh1.45 million with effect from April 17, 2024, until full payment is made.

Professional indemnity insurance is designed to protect lawyers, doctors, and other professionals against claims arising from their professional services, but disputes over coverage exclusions and claim validity continue to generate litigation.

The case is scheduled for hearing on September 24, 2025, and will likely set an important precedent for how professional indemnity claims are handled in Kenya’s insurance sector.

For Mr. Nzakyo, the outcome will determine whether he recovers the substantial personal funds he expended to fulfill his professional obligations while his insurer allegedly abandoned its contractual commitments.

The dispute also raises broader questions about transparency in insurance policy terms and the obligations of insurers to clearly communicate coverage limitations to their clients, particularly in specialized professional contexts where the consequences of coverage gaps can be severe.​​​​​​​​​​​​​​​​