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Consequential loss not covered

Mohammed made a claim under his commercial motor vehicle policy when a tractor he leased was maliciously damaged. Mohammed told the insurer the lease agreement had been made verbally, and that he had agreed to insure the tractor while it was in his care. The insurer accepted the claim.

Mohammed also wanted to claim for lost rental revenue from when the tractor had been out of action while it was being repaired. Mohammed’s insurance broker spoke with the insurer about this. They both agreed the loss would not be covered under the policy because the owner of the tractor (not Mohammed) had suffered the loss.

Mohammed believed the loss should be covered and complained to the insurer.

Mohammed also complained that the insurer had increased his excess after the claim for malicious damage. Mohammed believed the increase was not fair because the damage was not his fault.

We started an investigation because the parties were unable to agree on whether loss of use was covered under the policy, and about the excess.


The insurer said loss of use was excluded on the policy schedule.

Further, the owner of the tractor had not presented evidence of lost revenue. Mohammed had presented a written lease agreement (after he said the agreement was verbal). The written agreement was not signed by Mohammed, and it did not say anything about loss of use.

The insurer explained that it had not increased the excess. The excess applicable to claims for the tractor had always been $1,500. On an unrelated claim, the insurer had applied a $500 excess by mistake. Mohammed benefited from the mistake.

Mohammed maintained that loss of use should be covered under the policy. He pointed us to a different part of the policy which was about the insured’s legal liability for consequential loss to the owner of a hired vehicle. Mohammed also maintained that the excess had increased.


We concluded that the insurer had not increased the excess. Rather, it appeared there had been a misunderstanding on Mohammed’s part because the insurer had once applied the wrong excess amount.

We agreed with the insurer that loss of use was excluded under the policy. It was an optional policy extension that Mohammed had not selected. Even if he had selected this extension, it would not have been relevant to his situation. The extension covered the cost of hiring a substitute vehicle, which was not the type of loss Mohammed had wanted to claim.

The policy wording about legal liability for consequential loss also did not seem to provide cover. Mohammed had not explained why he had a legal liability to the tractor owner for lost revenue, and there was no evidence to suggest he had compensated, or that he had to compensate, the owner of the tractor.

We asked Mohammed why he believed he may have been able to claim under this policy wording and to provide any supporting information he had.


Mohammed decided to discontinue his complaint instead of responding to our request for further information. He did not want to spend further time on the complaint.

Insights for consumers

If the insurer had increased the excess applicable to Mohammed’s policies when they were renewed, we would not have been able to consider the amount of the increase. We are not able to consider an insurer’s commercial judgement in decisions about insurance.

We would only have been able to consider concerns about maladministration, such as the insurer applying a larger excess than it should have under its contract with Mohammed.