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Broker not liable for client’s loss

Tamati was a long-standing client of the insurance broker. They had arranged comprehensive business cover for Tamati’s roofing business for many years.

Tamati had motorbikes, which he owned and was restoring, at his business’s workshop. The motorbikes were damaged during a burglary. The insurer declined Tamati’s claim for the loss. The motorbikes had not been declared to the insurer, and they were not connected to Tamati’s business. Even if the motorbikes had been declared, the insurer would not have covered them.

After the claim was declined, Tamati complained to his broker. Tamati believed the broker knew about the motorbikes but had not told the insurer about them. The broker had also not told Tamati the motorbikes needed to be insured separately (to the business insurances).

The broker believed they had not done anything wrong. They did not know about the motorbikes until the claim was made after the burglary.

Tamati did not accept the broker’s position, and asked FSCL to investigate his complaint.


Tamati felt the broker firm were responsible for his loss because their role was to give advice about cover. The broker should have offered policies which covered the motorbikes. Tamati said he would have paid extra to insure the motorbikes with a different insurer.

The broker believed they were not responsible for the loss. They did not know about the motorbikes, and Tamati had not mentioned cover for them.


On the balance of probabilities, we concluded that the broker should have been aware the motorbikes were stored at the workshop. Tamati’s version of events seemed credible. It seemed unlikely he would have hidden the motorbikes from the broker when they visited the workshop. It was more likely that the broker had not undertaken thorough onsite visits.

If the broker had been aware of the motorbikes, they should have told Tamati the motorbikes were not, or were probably not, covered.

However, we concluded there was not enough evidence to say the broker had caused, or contributed, to Tamati’s loss. It was difficult for us to determine, without the benefit of hindsight of the burglary, whether Tamati would have taken out cover if he had known the motorbikes were not covered.

Tamati had never asked the broker about cover for the motorbikes. This cast doubt on whether insurance for the motorbikes, prior to the burglary, was important to Tamati. It was also difficult to know whether Tamati would have believed the cost of covering the motorbikes was worthwhile for the risk being insured.


We suggested that the broker should offer compensation to recognise Tamati’s inconvenience. It would have been incredibly disappointing for him to have found out the motorbikes were not covered, and he lost the opportunity to decide whether he wanted to insure the motorbikes while they were being restored.

The broker offered $2,000 on a goodwill basis, which Tamati accepted.

Insights for participants

Onsite visits are an important part of a financial adviser understanding a business’s insurance needs. If an adviser is aware of privately owned assets at the business’s site, they should discuss with the business what is covered and in what circumstances.

Where a privately owned asset is not covered (or cannot be covered) by the business insurer, it is good practice to explain this to the business. Where relevant, the adviser could refer the business (or owner of the asset) to a different insurer or broker who may be able to help.