Lara bought a piece of land, intending to clear the native bush on it and build a house. She took out an insurance policy through her insurance broker, Zane. Lara stored equipment in a shipping container and lived in a caravan on the land while the bush was cleared and the house was built.
A few years later Lara sold her caravan and moved away from the land. She returned every few weeks to continue working on the land. One day she returned to find that the shipping container had been broken into, and a generator had been stolen from it. Lara claimed $3,000 under her farm insurance policy for the theft of the generator.
The insurance company declined Lara’s claim because, it argued, it was not told that Lara was no longer living on the land. The insurance company argued that if it had been told, it would have imposed an excess of $5,000 for loss by malicious damage, such as forced entry and theft.
Lara complained to Zane. She argued that she had specifically called Zane’s office to tell him that she was no longer living on the land. Zane argued that Lara could not have called to tell his office about the change in occupancy, otherwise his staff would have noted the change and informed the insurance company.
Lara complained to FSCL.
Unfortunately Lara had not taken a note of the details of her call to Zane. Lara could not conclusively prove that she had told Zane she was moving.
We asked Zane for details of his internal note taking and record keeping system. Zane’s non-adviser staff were in charge of answering phones and making administrative changes to existing insurance policies. Zane’s staff did not, however, make a note of, or record, all incoming calls. Nor were there any file notes regarding a call from Lara or a change in the details of the policy.
Our case manager thought that Lara could have called Zane’s office to mention her move, but that no further action was taken by Zane’s staff. Lara said that she had instructed Zane’s staff to cancel her caravan insurance policy at the same time as she notified her change in address. The caravan policy was cancelled.
Our case manager also asked for opinions from other insurance companies to determine whether they would have imposed a $5,000 malicious damage/theft excess. The insurance companies said they would probably have imposed a similar excess.
We asked Zane to make an ex gratia settlement offer to contribute towards Lara’s loss. Regardless of whether the insurance company would have imposed a $5,000 excess or not, a customer service issue had been identified, causing stress and inconvenience for Lara in having to dispute her claim with the insurance company and with Zane.
Moreover, we were concerned that Zane could not provide a conclusive record of incoming/outgoing calls or action points to be made on behalf of clients. This could be a problem in future cases for Zane if he faced a similar allegation from a client, where a larger loss had been suffered by the client.
Zane agreed to make an ex gratia offer to Lara, and the complaint was settled.