“At least I have lease cover, right?”

The accident

Marge owned a trucking company. In mid-April 2016 one of the company’s trucks was involved in an accident and was written off. Marge immediately called her insurance broker to ask whether her company’s insurance policy provided cover to lease another truck, while the claim for replacement of the damaged truck was being finalised, and until she actually received a replacement truck.

Marge’s usual contact at the broking firm (Hayley) was not available, and another staff member told Marge there was lease cover and to go ahead and lease another truck. Marge immediately hired a truck to enable completion of jobs the next day.

The claim for the truck

The broker submitted Marge’s truck replacement claim and on 6 May 2016, the insurance company paid Marge $58,000. Marge had arranged a truck to purchase, but it would be a few more weeks until Marge was going to receive the new truck from the vendor.

The claim for the lease costs

After she received the new truck, Marge decided to have the truck painted (which took a week). On 13 June 2016, the painting was completed and the truck was ready to go on the road. The total lease costs for the 8 week period were $6,181.89. Marge said she was willing to cover the lease cost for the week the truck was being painted.

However, when Marge submitted the details of the lease costs to her broker she was told there was never any cover for lease costs, being an error on the broker’s part.

The broker’s offer to resolve the complaint

The broker apologised for the error, and said it would put Marge back in the position she would have been in had she had the lease cover in place. If Marge had had cover in place, she would have had the benefit of lease cover until the $58,000 payment was made on 6 May 2016. This amounted to a sum of $1,303. The broker said Marge could reasonably have known that the lease cover would end on 6 May 2016, being the day the truck claim was paid.

Marge’s view on the offer

Marge was not satisfied with the offer and said ideally, she should have been told in April, when she first contacted the broker after the accident, that she had no lease cover. However, Marge said that at the very least she should have been told on 6 May 2016 that the lease cover would cease that day (both the broker and Marge still being under the mistaken impression on that date that Marge had the lease cover).

If Marge had been told earlier that there was no lease cover, or that the cover would end on 6 May 2016, she would have looked into other options (such as borrowing a truck from an acquaintance), instead of leasing the truck for as long as she did.

Marge also said that when she was speaking with Hayley about the lease cover issue, Hayley said because she had been able to secure the $10,000 in cover Marge was not technically insured for, this subsumed the alleged $6,181.89 lease costs in any event.

Overall, Marge was disappointed with the broking firm’s service, especially as she had been a customer for 20 years. In particular, Marge felt the broking firm should have had a better understanding of the cover she held, and advised her correctly when she contacted it in April following the accident.

Marge complained to FSCL.

Our review

We reviewed the file and it was clear there was a discrepancy between the parties about exactly when Marge was told the lease cover would cease. There was also discrepancies about the advice given by Hayley and Marge’s instructions to Hayley, as to the type of cover required for the truck at both the February 2015 and February 2016 renewal meetings with Hayley.

We spoke to the broking firm about whether it might consider increasing its offer, taking into account the following factors.

a) The broker had caused Marge inconvenience in providing the incorrect information about the lease cover.

b) It was not necessarily reasonable to assume Marge knew the lease cover (if it had been in place) would have ended upon payment of the truck claim on 6 May 2016.

c) It was not clear when the broker told Marge about the fact that lease cover was never in place. We could see why Marge thought the lease cover would be in place until approximately 6 June 2016 (Marge being prepared to cover a week of the lease cost while the replacement truck was being painted).

d) Consideration needed to be given to the fact that Marge had not actually paid the increased premium she would have needed to pay to have the lease cover in place.

The broking firm reconsidered its offer, and said it would pay 65% of the lease costs, being an offer of $4,018.23. Marge accepted there was a ‘he said, she said’ situation in relation to when the broker gave her certain information, and decided to accept the $4,018.23 offer in full and final settlement of the complaint.

Our insight

In this case, there was a human error by the broking firm in providing incorrect information to Marge about the lease cover, at the time of the accident. However, the broker’s service following that error then exacerbated the issue; in particular, when it did not outline explicitly to Marge that the lease cover was ceasing on 6 May 2016.