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A steep ‘learner’s’ curve

Ratan seeks motorbike insurance

Ratan was given a motorbike in December 2014, and had a learner’s motorbike licence. Ratan called a specialist motor vehicle insurance broker to insure his bike, and told the broker he had a learner’s motorbike licence. Ratan’s broker placed a policy for him, and said that if the bike was damaged while Ratan was riding it, he would pay an excess of $1,000. Otherwise, if Ratan was not riding it, the excess would be $500.

Ratan said that when his broker was putting through his application, it had to record Ratan as having a full motorbike licence in order to move through the computer-automated application process.

In July 2015, Ratan purchased a new motorbike, and called the broker to update his policy. The broker suggested Ratan take out a comprehensive policy. Ratan’s licence status was not discussed.


The accident

In August 2015, Ratan was involved in a crash while he was driving his motorbike. Ratan’s insurer declined Ratan’s claim for the costs of repairing his vehicle (around $13,000), because Ratan was on a learner’s motorbike licence.


Ratan’s complaint

Ratan complained his broker caused his loss because it should never have advised him to take out the comprehensive policy in July 2015. Ratan said his broker knew he was on a learner’s licence, making him ineligible for cover.


The broker’s view

The broker said in the telephone conversation in December 2014, it told Ratan it would be unable to place a comprehensive policy because he was not allowed to ride the bike on the road while he only had a learner’s licence. Only fire and theft cover was available. Moreover, the broker said Ratan remained aware in July 2015 he would not be covered under a comprehensive policy for anything other than fire and theft.

The broker also said it was under no obligation to check Ratan’s licence status in July 2015, and the insurance schedule said cover was subject to Ratan holding the right licence.



Ratan argued that because his broker did not ask about his licence type in July 2015, this absolved him from his responsibility to ensure he had the correct licence to be driving his motorbike. Ratan also argued that because his broker did not ask him about his licence type in July 2015, and offered him a comprehensive policy, the broker misled him that he was covered under that policy.

Ratan complained to FSCL.

We did not agree with Ratan’s arguments and said the complaint should not be upheld.


Ratan was aware his learner licence status would affect coverage

It was clear during the telephone calls in December 2014, that Ratan was told he could only get fire and theft cover because he was on a learner’s licence. We thought it was unreasonable for Ratan to think things would have changed simply because he bought a new bike and updated his policy.

We were also satisfied the broker explained what ‘comprehensive’ cover was in December 2014, and that Ratan could not get comprehensive cover while on a learner’s licence.


Duty of disclosure

It was not reasonable to expect the broker to keep a record of all clients’ licence types, as licence types can change regularly. Brokers have thousands of clients, and the insured is in a better position to be aware of the material nature of their licence type.


Duty to read the insurance policy

Ratan had a duty to read his insurance policy, which contained an exclusion relating to being on a learner’s licence. If Ratan had read his policy, he could have at least been aware that his licence status may affect any future claim.


Did the broker mislead Ratan?

We said the broker did not mislead Ratan when it said it needed to record him as having a ‘full’ licence during the application process, nor when it said: “So only a $500 excess would apply because you’re not allowed to ride it, if you were riding it, um then it would be $1,000”.

It was clear the broker was going through the motion of putting the application through, and that the $1,000 excess would not apply because Ratan was not supposed to be riding the motorbike. It was also made very clear during the calls in December 2014 that Ratan was ineligible for cover because of his learner licence status.

Also, even though the broker recorded Ratan as a ‘full’ licence holder during the automated application process, this was never passed through to the insurer, which we accepted.


No loss

We said Ratan had suffered no loss, because even if he had told the broker in July 2015 he was on a learner’s licence, he would not have been issued with a comprehensive policy. Ratan could have sought comprehensive cover elsewhere, but he was unlikely to find another insurer prepared to provide comprehensive cover while he was on a learner’s licence. When Ratan had the accident, he would have been in the same position.

Ratan said the broker caused him loss, because if he had been told he could not get comprehensive cover in July 2015, this would have ‘pushed’ him to get his full licence. We said this was a long bow for Ratan to draw – it was Ratan’s responsibility to ensure he had the correct licence to be driving the motorcycle and to be able to claim under the policy.


Our insight

The broker could have enquired with Ratan in July 2015 what licence he had, and the complaint may have been avoided. Ultimately however, Ratan was responsible for his loss.