QUESTION:
We have a client with a number of vehicles insured with the same insurer. He had two Range Rovers, both insured, sold one and instructed us to cancel cover on it. He advised the wrong rego. so the Range rover he sold, was still insured, and the Range Rover he owned, was no longer insured.
The error was picked up when he had a cracked windscreen and we advised it was the Range Rover cancelled a few months earlier.
The incorrectly insured (actually sold) range rover was insured for more and had higher premiums than the one that was cancelled.
We approached the insurer, advised them of the innocent mistake our client had made, and confirmed they'd actually collected more premium from the error than they otherwise would have. We requested the cancelled cover be reinstated and the incorrectly covered vehicle be cancelled. i.e. correct the error.
Insurers have said no, as the client had put the incorrect instruction to cancel in writing, it was his error and they would not consider helping out. Regardless of the intent of the client, or the fact they insure all their vehicles with them, and the fact they'd collected more premium than they should have from the error.
We believe intent should be taken into consideration and the circumstances but NZI absolutely refuse to consider (the windscreen was $6,000 to replace). Client's business with them worth $21,000 co premium over last three years, with this being first claim.
Under contract law does the client,s actual intention come into consideration, or do they not have a leg to stand on?
EXPERT ANSWER: Crossley Gates - Glaister Keegan
The issue here is not so much what the parties intended, but a mistake made by one of the parties. The instruction given to the broker, and passed on to the insurer, was incorrect.
Contractually, the insurer has every right to rely on the instruction, and the effect it had on the insurance contract. It has chosen to do so.
Of course, whether that is good business may be another matter.
