Greg and Leah owned a stag. Their stockbroker, Kevin, contacted an insurance broker on their behalf and arranged for the stag to be insured for one year. The sum insured was $12,000. The insurer sent Kevin an invoice for the insurance premium, and a schedule that noted the beginning and end dates of the insurance cover. The premium was paid, and the insurance was placed.
Towards the end of the insurance period, the insurance broker sent Kevin a letter, to the same (correct) address, reminding him that the policy was soon to lapse, and asking if Greg and Leah wanted to renew the policy. Kevin said he did not receive that letter. The policy lapsed, but nine or ten days later the stag died unexpectedly. The insurer declined to pay Greg and Leah’s insurance claim because the stag died after the policy had expired.
Greg and Leah complained to FSCL about the insurance broker. They said the broker did not take an acceptable level of care to ensure they remained insured. Had they known the policy was about to expire, they would have renewed the policy and increased the cover to at least $80,000, based on what their vet said another stag had recently sold for.
The insurance broker said it is extremely unusual for anyone to extend cover for stags past the initial one-year period. The stag will have produced offspring by then, so the need for insurance falls away.
We noted Leah had confirmed that it is not usual practice for stock insurance to be renewed beyond a single season. We felt this added weight to the insurance broker’s argument that it did not have any duty to follow up with Greg and Leah when there was no response to its letter, nor when they did not take any step to renew the insurance.
We considered that Greg and Leah, and Kevin, had the knowledge that the policy was going to expire when it did. After all, the initial premium had been paid, and the invoice for that had been sent with a schedule noting the relevant dates. We considered that it was their responsibility for knowing when the policy would lapse, and to ensure it was renewed in time (if that was their wish).
We spoke to the insurance broker, who offered to pay $500, without admitting any liability, to resolve the complaint. Greg and Leah did not reply to this offer. We closed our investigation.
Insights for consumers
You should not rely wholly on an insurance broker to ensure you remain insured. Ultimately, it is your responsibility to renew your insurance policy, if that is what you want to do.