A tree falls in suburbia
Queenie, an insurance broker, arranged liability insurance for Xavier’s tree felling business.
Xavier was working on a client’s property and felled a 14 metre tree. Unfortunately the tree damaged a neighbouring fence and garage.
Xavier claimed for the cost of repairing the damaged fence and garage under his liability insurance. The insurance company declined Xavier’s claim. The policy wording excluded cover for loss caused by tree felling, where the tree felled was more than 3.5 metres tall.
Queenie accepted that she was at fault because the policy she arranged was clearly not suitable for Xavier’s business. Queenie paid Xavier $5,000 for the loss.
Queenie asked the insurance company to contribute towards the loss, arguing that it had a duty to advise her of any pitfalls in its policy wording, and that this particular insurance company’s height restriction was abnormal, when compared with other public liability policies available in the market.
Queenie and the insurance company could not resolve their dispute, so they referred it to FSCL.
FSCL’s review
A broker’s role is to follow a client’s instructions. Without specific instructions, a broker must obtain suitable insurance cover for the client’s needs. Determining the scope of cover offered in insurance policies available in the market, and advising a client about which policy to take out, is fundamental to the insurance broker’s role.
FSCL thought that it was reasonable for the insurance company to assume that Queenie was aware of:
- what the insurance company’s policy said about Xavier’s tree felling business, and
- what the other public liability policies available on the market offered.
The insurance company could reasonably expect Queenie to have made Xavier aware of the height restriction.
Queenie could not pass her liability on to the insurance company, as the insurance company had not, in any way, contributed to her negligence.
Outcome
FSCL’s CEO recommended that Queenie withdraw her complaint.
