Himani held business insurance with an insurer, which covered her small café business that she operated out of a commercial premise leased from her landlord.
In March 2022, the leased premise flooded causing damage to Himani’s property, including the cabinetry that she owned. The insurer accepted Himani’s claim for the damage. The cabinetry was custom and the manufacturing slow, being completed in July 2023 with installation scheduled to start in August.
In July 2023, Himani and her landlord agreed that Himani would end her lease early, on 28 July. Himani updated the insurer, explaining that she and her landlord were negotiating for him to buy the cabinetry. On 28 July, the insurer told Himani that the cabinetry was manufactured and due to be installed so it was too late to cancel her claim, but it might be a good solution for her landlord to buy the cabinetry.
On 24 July, Himani told the insurer that her landlord did not want to buy the cabinetry. Himani said:
“I do not want it and do not require it. My business is closing as of Friday the 28th July and I wish to cancel my claim with you for this. …. Once again I am cancelling my claim”.
The insurer then arranged for Himani’s landlord to receive the cabinetry if he paid the installation costs.
Believing that the insurer had given the cabinetry away to her landlord without her permission, Himani complained to FSCL.
What were the parties’ views?
Himani said that the cabinetry was part of her claim, making it her property, and the insurer had no right to offer it to her landlord without her permission. When she sent her email on 24 July, she was not abandoning her ownership of the cabinetry, she was simply saying that she did not want the cabinetry installed and that she intended to make arrangements to collect it from the insurer later. Himani wanted the cabinetry returned to her, or to be reimbursed for the value of the cabinetry.
The insurer explained that they understood Himani’s email on 24 July as meaning that she was cancelling her claim, that she did not want the cabinetry, and was leaving it up to them to decide what to do with it. The insurer did not agree that they were required to reimburse Himani for the cabinetry.
What was FSCL’s view?
We decided that it would not be fair to require the insurer to reimburse Himani for the cost of the cabinetry, because the insurer’s actions were not unreasonable based on the information available to them at the time.
When reading Himani’s 24 July email and considering it in context, we interpreted it the same way that the insurer did – that Himani did not want the cabinetry, and she wanted to cancel her claim. It was reasonable that the insurer understood this to mean that it was up to them to decide what to do with it, and there was nothing to suggest that the insurer knew, or should have known, that Himani expected to continue to own the cabinetry.
What was the outcome of FSCL’s investigation?
We explained our decision to Himani. We then discontinued Himani’s complaint and closed our file.
Insights for consumers
To prevent miscommunications from occurring, it is important that any requests or information that you provide to your insurer are clear and easy to understand. This will ensure that everyone is on the same page when discussing the claim.
In Himani’s circumstances, the email that she sent to her insurer said one thing, however, Himani said that she meant something else. Clearer communication from Himani about what she meant when she said “I do not want it and do not require it” to explain that she did not want it “installed” would likely have prevented the misunderstanding that took place.
