IFSO Case Study

A company held various liability, crime and consequential loss covers.

One day it discovered an employee had stolen company property, including property owned by the company’s clients. As a result of the theft, the company lost several clients and income from hiring out the stolen items.

The company made a claim to the insurer for the theft and financial loss. The insurer accepted the theft claim and paid the company $25,763. However, it declined the financial loss claim, saying employee theft didn’t trigger consequential loss cover under the policy.

The company disputed the insurer’s decision, because it believed it should be covered.

The IFSO Scheme found that, under the policy, the consequential loss cover was only triggered by a claim under the general, statutory, or employer’s liability covers, and the theft claim was accepted under the fidelity cover. In addition, the policy exclusion stated there was no specific consequential loss cover following a claim under the fidelity cover.

Therefore, under the terms of the policy, the financial loss was not covered by the policy, as it wasn’t a result of one of the defined events.

The IFSO Scheme found that the insurer could rely on the policy to decline the financial loss claim, as it was outside the policy’s scope of cover.

Complaint not upheld

It is so important for a consumer to understand the scope of cover long before a claim is made. The IFSO Scheme often has to deal with consumers who are unhappy, because their expectations haven’t been met. Good communication is key to ensuring consumer satisfaction.


March 2023

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