In August 2022, Amiri bought a $36,000 trailer for his business. In October 2023, the trailer was badly damaged, so Amiri made an insurance claim.
The insurer found that the trailer was a total loss, so they agreed to pay Amiri the pre-accident value of the trailer. The insurer contacted three different valuation companies to assess the trailer’s value. Two of the companies found that the pre-accident value was $28,000, and the third found that the value was $32,000. The insurer accepted the average of these valuations, which was $29,300.
There was a section in Amiri’s policy that said if the value of the trailer was less than 85% of the sum insured, the insurer would increase their offer by 15%. Amiri had insured the trailer for $45,000, so the insurer’s offer was quite a lot less than the sum insured. This meant that the insurer increased their offer to $33,700.
Amiri did not agree with these valuations. He explained that he had refurbished the trailer after he purchased it, which increased its value. Amiri contacted two companies that specialised in valuing commercial machinery. Both companies found that the pre-accident value of the trailer was $40,000. Amiri thought that these valuations were more accurate, so he submitted them to the insurer.
The insurer did not accept the valuations Amiri gave them, as they said they were not from industry recognised valuers. The insurer also had concerns about the accuracy of the valuations. For these reasons, the insurer declined to increase their offer.
Amiri thought that the insurer’s offer was too low, so he complained to FSCL.
Review
We found that the valuations Amiri obtained, and the valuations that the insurer had obtained, were all acceptable. It was reasonable to accept the valuations the insurer obtained, as they were from industry recognised valuers.
Although the valuations Amiri obtained were not from industry recognised valuers, they were from companies that sold commercial machinery and equipment, such as Amiri’s trailer. We accepted these valuations, as the companies had expert knowledge of valuing and selling commercial equipment.
We decided that it was fair to accept the average of all five valuations as the pre-accident value of the trailer, which was $33,600. As this was still less than 85% of sum insured, we increased the value by 15%, to $38,640.
Resolution
The insurer did not accept our preliminary decision, as they remained concerned about the accuracy of the valuations Amiri obtained. We reviewed the insurer’s comments but found that the valuations were based on accurate information. We issued a final decision confirming that the insurer should pay Amiri $38,640.
Insights for consumers and participants
If a consumer thinks that their insurer’s offer is too low, they can obtain and submit their own valuations. If the consumer’s valuation is from a suitably qualified expert, we would expect the insurer to accept the valuation and review their offer.
