In December 2015, Holly approached an insurance broking firm (‘The Company’) in order to arrange a number of insurance policies. Holly already had car insurance for a car purchased in November 2015 with a different insurer. Her insurance was for an agreed pay out value of $12,000.
While Holly was arranging other insurance through Ravi, an insurance broker at The Company, she also decided to move her car insurance to another provider with an agreed pay out value of $9999. This was arranged by Ravi. Holly was happy with the reduced sum insured because it meant she paid less in premiums.
Following a crash in October 2017, Holly claimed insurance for her car which was written off in the accident. When she did so, Holly discovered that she did not have agreed value insurance in place, but market value. This meant that she would only receive $7,700 after paying $300 excess, rather than the $9,999 she thought she was entitled to.
Based on the communications Holly had with Ravi in December 2015, Holly was under the impression she had agreed value in place. She believed Ravi had misrepresented that he would place agreed value insurance. Holly said that she wouldn’t have made the change to a new insurer if she knew she would only have market value.
When Ravi would not pay her the difference between the market value and the agreed value that Holly thought she had, Holly complained to FSCL.
Who’s at fault? The broker or the broker’s firm?
Ravi was working for The Company as a contractor. At first, Ravi (who was no longer contracting for The Company) and The Company disagreed about who was responsible for addressing the complaint.
The Company reasoned that, because Ravi was registered in his own capacity as a financial service provider, it was his responsibility to respond.
However, we reasoned that the complaint was The Company’s responsibility because Holly did not deal exclusively with Ravi. All of the emails which Holly recived were signed off by The Company as well as the individual broker and the initial introductory email said “welcome to The Company” .
Moreover, Holly had other insurance policies with The Company and believed, at the time of signing, that she was contracting with The Company.
After notifying The Company that we believed it was responsible for the complaint, The Company said that it was willing to pay the difference between the $9999 agreed value insurance that Holly thought had been put in place, and the $7700 market value insurance that was in place.
The Company offered to pay the difference in full and final settlement of the complaint and to recognise the longstanding relationship which Holly had with The Company.
Holly agreed to this payment and withdrew her complaint.
Key insight for consumers
Intervention from FSCL can help generate action from the party who should be responsible for the complaint. Once The Company was aware that the complaint was their responsibility, it acted quickly to ensure its client was not at a loss.