In early 2022, Ha Joon contacted his insurance broker. Ha Joon had bought a car for his teenage son, Min, to work on as a project (the car). Ha Joon wanted to arrange insurance for the car. Ha Joon told the broker that his son was not going to be driving the car, so he only wanted to insure it as a project car for Min to work on. Ha Joon said that he would contact the broker to update the policy when Min was ready to start driving the car. Ha Joon’s insurance broker recommended a hobby car insurance policy (the policy). The policy excluded drivers under the age of twenty-five, and Ha Joon and his partner were the only named drivers on the policy.
A few months later, Min took the car for a drive with his friends. Min swerved on a blind corner and crashed the car. Min and his friends were uninjured, but the car was written off. Ha Joon was upset with Min. The next morning, Ha Joon told Min to call the insurance broker.
Min called the insurance broker’s customer service team to lodge an insurance claim for the car. Min told the customer service agent his name, mentioned the crash, and said he needed to check whether he had ‘the right cover’. The customer service agent told Min that he had comprehensive cover and sent Min an electronic claim form to fill out. Min asked the insurance broker what comprehensive cover included. The customer service agent said that comprehensive car insurance covers most situations, but that if Min wanted to know exactly what was covered, he should contact Ha Joon’s insurance broker directly. Neither Ha Joon nor Min contacted their personal insurance broker. Min submitted the electronic claim form a couple of hours later.
That night, an unidentified third party set fire to the car, destroying the car. The car had been left where Min crashed.
When the insurer discovered that Min had been driving the car, they declined the claim, and voided the policy since inception. Ha Joon had never disclosed that Min had begun to drive the car.
Ha Joon complained to FSCL.
Dispute
Ha Joon said that the insurance broker’s customer service agent should have told Min that he was not covered under the policy during the phone call. Ha Joon said that if the customer service agent had told Min that was not covered, Ha Joon would have arranged a tow for the car before it was destroyed.
Ha Joon said that there were $4,500 worth of salvageable car parts that he could have retrieved and sold if he had known Min was not covered under the policy.
The insurance broker said that they did not have all the information necessary to advise Min on cover during the phone call. The insurance broker also said that the insurer emailed Min to tell him that they would not be able to send an assessor out to the crash on the day of Min’s call, so Min’s claim could not have been assessed before the car was destroyed.
Review
We reviewed Ha Joon’s insurance policy, his emails with the insurance broker, and the recording of Min’s call to the insurance broker’s customer service agent.
In our view, it was unfortunate the customer service agent did not tell Min that his name was not listed on the insurance policy. However, we did not consider it fair and reasonable to hold the insurance broker responsible for Ha Joon’s loss because of that omission. Ha Joon had no reason to expect that Min would be covered under the policy. Ha Joon had specifically requested an insurance policy that was designed for a car that would not be driven. All the information Ha Joon had received from the insurance broker in the lead up to the crash confirmed that Min was not covered.
We thought that Ha Joon should have contacted his personal broker for more information if he was unsure whether Min was covered under the policy. We also considered that Ha Joon and Min had the opportunity to collect the car before it was burned out, regardless of Min’s call to the customer service agent.
Resolution
We suggested that Ha Joon discontinue his complaint. Ha Joon asked us to reconsider our position. We reviewed Ha Joon’s complaint and issued a final decision confirming our view that Ha Joon should discontinue his complaint.
Insights for consumers
If you have several insurance policies through the same broker, it is important to be aware of what each policy covers and who is covered under the policy. When you are preparing to make a claim under an insurance policy, it is a good idea to review the policy documents so that you are aware of what risks are covered.
