Alison bought a section intending to build a home on it. While she was waiting for the building to begin, Alison had a driveway built to give the builders access to the site.
When work was finally ready to begin, Alison contacted an insurance adviser to arrange contract works insurance. Alison was under some time pressure, and needed the insurance in place the same day that she contacted the adviser. The adviser successfully arranged contract works insurance.
About a year later a weather event damaged the driveway. Alison submitted a claim under the contract works policy for an estimated repair cost of $30,000-$40,000. The insurer declined the claim because the policy did not cover ‘existing structures’.
Alison considered the adviser had sold her an inappropriate policy as it had not covered her driveway and, when she was unable to resolve the complaint directly with the adviser, Alison complained to FSCL.
Dispute
Alison said she told the adviser about the driveway, and other existing structures, when she arranged the cover and expected that the policy he recommended would cover existing structures as well as any damage arising from or during the house build. Alison’s new insurance adviser said it would have been possible to arrange cover for existing structures through a different insurer.
The adviser said he was unaware there were existing structures on the property and that he had acted quickly, at short notice, to arrange cover for Alison. The adviser also said that the insurer did not cover existing structures, so it would have been impossible for Alison to arrange cover for the driveway.
Review
We contacted the insurer and confirmed that the policy would not cover an existing structure, including a driveway. The insurer said they would consider insuring roading under a material damage policy but would not cover a temporary aggregate driveway.
Alison did not accept that the driveway was temporary and said it was built to ‘roading standard’. Alison continued to say that her new adviser would have been able to arrange cover for the driveway.
We weighed the information from the insurer and Alison and decided the insurer’s advice, that it was not possible to insure the driveway, was more persuasive. The evidence came directly from the insurer while Alison was relaying what her new adviser had told her.
The insurance adviser disputed that Alison had told him about the driveway when arranging the cover but, it was our view that a prudent adviser would have asked Alison if there were any existing structures on site. The adviser could then have explained to Alison that it was not possible to insure the driveway.
If the adviser had explained it was not possible to insure the driveway when the insurance was placed, Alison would have avoided the stress of discovering, in the wake of a weather event, that she was not insured. Alison would also have had the opportunity to look for appropriate cover or to self-insure the risk of damage to the driveway. Alison told us that she could not afford to repair the driveway and would have to sell the house to cover the repair costs. We thought it fair that the insurance adviser should pay her $500 as compensation for this stress.
Resolution
The insurance adviser had not caused Alison a financial loss because, on the information available to us, she could not have insured the driveway. We suggested that Alison discontinue her complaint. We did not hear back from Alison and closed our investigation.
Insights for participants
Proper communication sits at the heart of many of the complaints that come before us. If the insurance adviser had taken the time to find out a little more about the property to be insured and asked some more questions Alison would not have misunderstood the extent of her cover and the complaint may well have been avoided.