Car crash leads to 5-month claim during Covid-19 lockdown

In February 2020, Tom crashed his car and submitted an insurance claim to his insurance broker to send on to his insurer.


Insurer requests information

The insurer asked the broker to request further information from Tom about the crash, including a copy of Tom’s licence and the claim form signed by his mother, who was the owner of the policy.

The broker asked Tom for the information the insurer requested, but forgot to ask him for the signed claim form.


Licence mix up

Tom’s licence appeared to be a learner licence, so the broker queried with Tom’s mother whether he had a full licence to drive the car. Tom got in touch with the broker and explained that his licence had the learner colour and label because he had a learner motorbike licence in addition to his full car licence.


No signed claim form

Around the same time New Zealand went into Covid-19 level four lockdown in March. the insurer followed up with the broker for Tom’s signed claim form. Tom’s mother told the broker she would need to wait to be back at work to have access to a printer and scanner.

Meanwhile, the insurer still had not approved a repair quote from the panel beater, and the claim stalled whith the panel beater closed for lockdown.


Panel beater delays

Tom’s mother signed the claim form in early May. By June, the panel beater still hadn’t responded to the insurer about their repair quote.

The panel beater then told Tom there had been a burglary at the yard, and the parts for his car had been stolen. The panel beater would need to order replacement parts, which would be more expensive due to Covid-19.


Total loss option

The broker discussed a total loss option with the insurer, since the repairs had progressed slowly.

The insurer gave the broker two options for Tom – he could repair the car for $6,000 (once the new parts arrived) or treat the car as a total loss for $8,000. Tom decided to proceed with the repairs.


Wrong parts arrive

The panel beater then advised Tom the wrong replacement parts had arrived for his car, and they would need to order new ones which were likely to be more expensive. By this time, it was late June.

The insurer told the broker with the new parts being even more expensive, Tom would have to pay the cost of any repairs above $6,000 or take the total loss option for $8,000.


Total loss settlement negotiated

Tom wasn’t happy with these options. He thought he should receive $10,000 for the total loss option. The broker explained the total loss settlement was based on the insurer’s pre-accident valuation of the car, and Tom could seek another if he didn’t think it was accurate.


Tom negotiates with the insurer

Tom still wasn’t happy with the total loss settlement offer, and asked the broker for the insurer’s contact details to speak with them directly. The broker confirmed the insurer was happy to speak directly with Tom, and told them they were willing to make a contribution to the settlement if it would get a satisfactory outcome for Tom.

Tom talked to the insurer, and accepted a total loss settlement for $9,000, based on another pre-accident valuation.

Tom then complained to FSCL about the broker.



Overall, Tom wasn’t happy with the broker’s service. He thought they had contributed to the delays with their administrative errors regarding his licence and the claim form. Tom also thought the broker had failed to represent his interests properly, meaning he had to negotiate his own settlement.

The broker acknowledged the frustrating delays with Tom’s claim, but felt there was nothing more they could have done to progress it faster.



We reviewed all correspondence between Tom, the broker, and the insurer over the course of the claim.

We found that the broker followed up with the insurer frequently to request an update on the claim to progress it faster.

Although the broker had made a few administrative errors along the way, we found none of these contributed to the delays, which were predominantly caused by the panel beater and lockdown. We also found that the broker’s conduct did not fall below the standard of a reasonable broker in making those errors, because they were only minor.

Although in the end Tom negotiated his own settlement with the insurer, the outcome was based on another pre-accident valuation rather than any failure by the broker to obtain a reasonable settlement. Furthermore, we thought the broker had gone above and beyond their obligations by offering to contribute to the settlement if it would get Tom a better outcome.



We issued a preliminary view recommending Tom discontinue his complaint. We could see why Tom’s claim was a frustrating process for him, but we didn’t think the broker could have done anything more.

Tom did not respond to our preliminary view and we closed the complaint.


Insights for consumers

Insurance brokers have an obligation to act with reasonable care, skill and diligence. In practice, when assisting with claims this doesn’t amount to much more than keeping your client informed and liaising with your client and the insurer for any information requested.

Ultimately, brokers cannot control the decisions an insurer makes, and usually cannot negotiate higher settlements without them being based on a quote or valuation.