In December 2015, the insured approached an insurance broking firm to arrange a number of insurance policies. She already had car insurance for a car purchased in November 2015 with a different insurer. Her insurance was for an agreed pay out value of $12,000.
While she was arranging other insurance through an insurance broker at the insurer, she also decided to move her car insurance to another provider with an agreed pay out value of $9999. This was arranged by the same broker. She was happy with the reduced sum insured because it meant she paid less in premiums.
Following a crash in October 2017, she claimed insurance for her car which was written off in the accident. When she did so, she discovered that she did not have agreed value insurance in place, but market value. This meant that she would only receive $7700 after paying $300 excess, rather than the $9999 she thought she was entitled to.
Based on the communications she had with the broker in December 2015, she was under the impression she had agreed value in place. She believed the broker had misrepresented that he would place agreed value insurance. She said that she wouldn’t have made the change to a new insurer if she knew she would only have market value.
When the broker would not pay her the difference between the market value and the agreed value that she thought she had, she complained to FSCL.
The broker was working as a contractor to the insurance company. At first, the broker and the insurance company disagreed about who was responsible for addressing the complaint.
The insurer reasoned that, because the broker was registered in his own capacity as a financial service provider, it was his responsibility to respond.
However, we reasoned that the complaint was the insurer’s responsibility because the customer did not deal exclusively with the broker. All of the emails which she received were signed off by the insurance company well as the individual broker and the initial introductory email welcomed her to the company.
Moreover, Holly had other insurance policies with the insurer and believed, at the time of signing, that she was contracting with the insurer.
Review
After notifying the insurer that we believed it was responsible for the complaint, it said that it was willing to pay the difference between the $9999 agreed value insurance that the insured thought had been put in place, and the $7700 market value insurance that was in place.
It offered to pay the difference in full and final settlement of the complaint and to recognise the longstanding relationship which she had with the insurer.
The customer agreed to this payment and withdrew her complaint.
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