IFSO Case Study

A man held insurance on his vehicle. In November 2018, he  discovered that the vehicle was “coated in a lime-type, concrete residue”.

The vehicle had been parked in the carpark in his apartment building. 

The man tried to remove the substance himself, but this did not work. He made a claim for the damage. The insurer accepted the claim, subject to the policy excess of $400. 

The insurer said that it would try to seek recovery from either the body corporate or the unit owner (“the third parties”). However, the insurer later said that, as the third parties did not accept liability, it was not able to recover the claim costs and refund the excess to its client.

He made a complaint on the basis that the insurer had said it would pursue the third parties and hold them liable for the claim. However, he did not believe that the insurer made sufficient efforts to do so. 

The case manager's assessment 

Under the policy, the insurer was not required to seek recovery from the third parties. However, in March 2019, prior to arranging for the repairs of the vehicle and paying the excess, he sought advice from the insurer. 

Having listened to the telephone call in March 2019, the case manager was concerned that the insurer had not adequately explained how it might seek recovery, or whether it would make a commercial decision to cease recovery action. Instead, it indicated that it would “fight for” the client.

He relied on this information and made a claim, rather than dealing with the third parties directly. 

The insurer then proceeded to send two emails to the third parties’ insurer, which was a related company. 

No further action was taken after the third parties’ insurer declined liability, as the insurer did not believe it could show the third parties were negligent.

As a member of the Insurance Council of New Zealand (“ICNZ”), the insurer agreed to be bound by the Fair Insurance Code.

The code “sets minimum service standards for insurance companies”. Paragraphs nine and 26 of the code require insurers to be transparent and act fairly. Transparency does require the deliberate concealment element that dishonesty would require. Following discussions with the case manager, the insurer agreed that it could have been clearer in its communication with the client and agreed to refund the policy excess of $400.

September 2020

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