The Liard First Nation (LFN) is taking its insurance broker to Yukon Supreme Court, claiming the company failed in its duties surrounding the uninsured Watson Lake Hotel before it was destroyed by fire in 2010.

In the lawsuit filed last week, the First Nation says it retained Aon Reed Stenhouse in 2007, after having purchased a number of properties, including the Watson Lake Hotel.

Around April 30, 2007, the LFN bought multiple insurance policies from Aviva Insurance Company of Canada, based on advice from AON, court documents say.

The insurance policies for the Dawson Block, Hyland House, Gateway Motor Inn and Belvedere Motor Hotel all provide coverage for replacement value.

The policy for the Watson Lake Hotel does not. It only provides coverage for $250,000 wreckage value.

The lawsuit argues that when providing its advice, Aon knew or ought to have known that the Watson Lake Hotel was vacant, had historic value and that the LFN planned to renovate and use it.

According to court documents, Aon sent the LFN two letters in 2009, letting the First Nation know the insurance policy on the Watson Lake Hotel would lapse on Oct. 30, 2009 because the hotel had been vacant for two years.

Four and a half months after the policy lapsed, the hotel burned to the ground.

Now, the First Nation is saying the insurance broker failed in its duties by, among other things, failing to provided complete and comprehensive advice, failing to fully assess the First Nation's risks, failing to properly advise the LFN of the consequences of a lapsed policy and what should be done as a result of the lapse, and failing to determine whether other insurance coverage was available for the vacant hotel once the policy expired.

Aon has not filed any defence yet in the case.

The documents do not specify exactly how much money the First Nation is seeking.

"If Aon had not breached the contractual duties, duties of care and fiduciary duties it owed LFN, LFN would have had insurance coverage in place for the (hotel) at the time it was destroyed by fire,” the lawsuit says.

"As a result of Aon's breaches of contract, breaches of duties of care and breaches of fiduciary duty, LFN suffered loss damage and expense from the destruction by fire of the (hotel).”

Both sides are next scheduled to appear in court June 25.