In January 2023, Leilani emailed her insurance broker explaining that her car had been damaged by the Auckland floods. She said it had minor water damage inside and underneath, and some mechanical damage.
Leilani said that her broker called her saying that she should get her car fixed as soon as possible. The broker said they didn’t call Leilani, but they emailed her over several days asking for photos of the damage, for her to keep receipts for her expenses and explaining that they were working towards submitting a claim with her insurer. Leilani took her car to the mechanic and paid $3,000 in repairs.
The insurer then decided to write off the car, offering Leilani the agreed value under her policy, which Leilani didn’t accept. Eventually, after a breakdown in their relationship, the broker gave Leilani notice that they would terminate their relationship as her broker in two weeks’ time, and that she needed to make alternative insurance arrangements.
Leilani was unhappy with her broker, so she complained to FSCL.
Dispute
Leilani complained that:
- Her broker gave her incorrect advice and told her to get the car repaired. She said that this was a waste of money because her insurer decided to write off the car.
- Because the car was being written off, she would only receive payment of the value she had agreed with the insurer when she renewed her policy, not the market value. She said this meant that there wouldn’t be enough money to buy a similar type of car.
- Her broker resigned from being her broker, and she didn’t have insurance for about six weeks. This was stressful for her.
Leilani’s broker said that they had not called Leilani or told her to get the car repaired. They said that the insurer’s decision to write off the car wasn’t something they had control over. To resolve the complaint, the broker offered to reimburse Leilani the $3,000 for the repairs.
Review
There wasn’t enough evidence for us to confirm that the broker had called Leilani and told her to get her car repaired.
We agreed with the broker that whether the car was written off was outside of their control, and if Leilani didn’t agree with it, she would need take it up her insurer. We also found that it was not unreasonable for Leilani’s broker to resign from providing her services after their relationship broke down. Two weeks’ notice was a sufficient amount of time for her to arrange new insurance.
We said that the broker had made a reasonable offer to resolve the complaint and suggested to Leilani that she discontinue her complaint.
Resolution
Leilani’s complaint was discontinued, and we closed our file.
Insights participants
It’s common for consumers, when they make an insurance claim, to deal with their insurance broker rather than their insurer directly. The insurance broker then communicates with the insurer. Consumers often then think that it’s the broker who has declined their claim, and incorrectly blame the broker when their complaint is actually about the insurer. This case also highlighted the common issue that consumers don’t always understand the difference between an agreed value versus a market value vehicle policy. Explaining the broker’s and the insurer’s role, and the difference between agreed and market value policies, are key things brokers should outline to their clients early on in their relationship.
