Who takes responsibility for loss following under insurance?


The story

When David bought a kiwifruit orchard in 2007 he discussed insurance with James, a broker with Premium Insurance Brokers.  David said James was familiar with insuring Kiwifruit orchards and trusted him to arrange cover.  James put together a general farm insurance package including natural disaster cover for the buildings, fences, bridges, underpasses, vehicles and equipment.  There was some uncertainty about the amount of insurance required for the crop and James asked David to come back to him with details of the ‘plants and trees’ he wanted covered.  David did not reply.  In 2009 James wrote to David again noting the growing crops were not insured and the orchard was not covered for loss of revenue resulting from major physical loss. Again David did not reply.  In 2010 James retired and David had no personal contact with the new brokers. 


In 2013 a major storm damaged the orchard.  David was able to temporarily repair the support structures holding the kiwifruit, and the crop was unaffected.  David understood his crop was not insured but lodged a claim with his insurer to repair the support structures, at an estimated cost of $15,000.  David’s insurer declined the claim because the support structures were not insured.



David contacted Premium Insurance Brokers, and said that when he arranged the insurance with James, James knew the support structures were integral to a kiwifruit orchard.  David had believed the policy covered the kiwifruit structures for loss caused by a natural disaster.  David asked: what is a cyclone if it is not a natural disaster?  If the policy did not cover windstorm damage to the kiwifruit structures David considered James should have told him.  David also said that since James retired he had not received any personal service.  David felt Premium Insurance Brokers simply collected the money without considering whether the policy was suited to his needs.


Premium Insurance Brokers said James provided the best insurance that was available in 2007.  A cyclone did not fall within the policy definition of a natural disaster.  Premium Insurance Brokers advised that in 2007 no insurance policy would have covered windstorm damage to a kiwifruit crop and structures.  Insurers do not differentiate between the crop and the structure, and insure them both together.  More recently a policy had become available to cover growing crops and support structures, but the premium for the orchard would have been over $5,000.  Premium Insurance Brokers considered the cost would have been prohibitive.  Premium Insurance Brokers agreed its service after James left could have been better.



We considered this complaint was appropriate for conciliation and both parties agreed to meet.  The conciliation process is confidential but we can say the parties reached a satisfactory outcome without the need for further investigation and a formal decision by FSCL.