Bob owned a business specialising in plum pollination. Bob would buy pure pollen from wholesalers, manufacture the pollen into a specialised pollen roll, and then use those rolls to pollinate his clients’ plum orchards.
The pollen was very valuable – costing around $5,000 per kg. So valuable, in fact, that in 2017 Bob was the victim of a heist. Thieves broke into Bob’s premises and stole $20,000 worth of pollen. Bob’s insurance covered the cost of the pollen, but Bob wanted to take steps to protect himself and his supplier.
Bob came up with a plan with his pollen supplier. Bob decided he would store his pollen at the supplier’s premises for most of the year, under much stricter security than Bob’s premises. Then, in summer, Bob would take the pollen to his own business, and start his pollen roll manufacturing and pollination.
Bob contacted his insurance adviser to ask whether this arrangement would affect his insurance at all. The adviser added the location of Bob’s pollen supplier to his policy schedule, so the pollen would be insured while it was stored there.
Dispute
In the summer of 2020, one of Bob’s refrigeration units malfunctioned, and he lost $30,000 worth of pollen. He submitted a claim to his insurer and was surprised to discover that his business premises were not listed on his policy schedule. Bob only had full cover for pollen stored at locations listed on the policy schedule, so for this claim his insurer only paid out $14,000.
Bob discovered that, in 2017, his insurance adviser had not just added the pollen supplier’s premises to the policy schedule; the adviser had also removed Bob’s premises. Bob said this was not what he had told his adviser to do, and he considered the adviser responsible for the $16,000 pollen loss which was not covered by his policy.
The adviser disagreed. The adviser said that Bob had given him clear instructions that all his pollen was going to be stored with the pollen supplier, rather than at Bob’s premises. The adviser was never told that Bob would be taking the pollen back to his own premises in summer. The adviser had also sent Bob a copy of the policy schedule, showing the changes that had been made.
Review
We reviewed Bob’s complaint and agreed that the insurance adviser was responsible for Bob’s loss.
The insurance adviser had a duty to understand Bob’s business and his insurance needs. In our view, Bob’s instructions should have prompted the adviser to ask about the changes to Bob’s business in more detail. The adviser should have understood that at least some business was still going to occur at Bob’s premises, and some of that business would need pollen on-hand. This meant that Bob’s own premises should have been noted on the policy schedule.
But we considered Bob had some responsibility for the loss too. The information he had given to the adviser had been quite unclear. Bob had also been given several opportunities to identify the misunderstanding and have the problem fixed: the adviser had told Bob about the changes to his policy, emailing him a policy schedule which showed that his premises had been removed, plus he had received a copy of the policy schedule each year, when his policy was renewed. In our view, these factors meant that it was not fair to place the loss entirely on the adviser.
Resolution
We recommended that the adviser pay 60% of Bob’s loss, and Bob take responsibility for the remaining 40%. Both Bob and the adviser accepted our recommendation.
Insights for consumers
Your insurance adviser needs to understand your business, to make sure your insurance needs are met. The adviser has a responsibility to ask you the right questions, but it is always helpful for you to provide your adviser with as much information as you can, to really give them a feel for your business and the way it operates. This can be key to preventing declined claims down the road.
