Broker backed in complaint over policy limits

The Australian Financial Complaints Authority (AFCA) has backed a broker in a property fire claim dispute centring on whether correct policy limits had been advised.

The complainant argued he suffered loss due to incorrect advice and omissions on limits for temporary accommodation and for personal and farm items and temporary removal of equipment. He also raised issues around the right of appeal and cover for building and planning fees.

On the accommodation, the complainant says the broker advised of a $28,000 limit, leading him to accept a $25,000 cash settlement offer, when he was actually entitled to as much as $58,000.

AFCA found there was no evidence to confirm the complainant was told of a $28,000 limit, and the broker had raised the possibility of cash settling for higher amounts.

The complainant had also not shown temporary accommodation costs of more than $25,000 would be reasonably incurred during rebuilding.

“He has not demonstrated that the broker breached its duty of care,” AFCA says “Further, the complainant has not proven that he has suffered a loss.”

The policyholder further argued the broker did not tell him of policy limits for personal and farm items and the temporary removal of equipment, and delays in providing a settlement proposal meant he had only one day to consider the offer.

AFCA says the limits were in documentation and there’s no indication the broker had provided misinformation.

The insurer was not willing to pay the complainant a requested $40,000, as it was not satisfied with proof of loss information, and the policyholder was frustrated by delays in progressing resolution discussions, the decision says.

Negotiations had continued until the insurer agreed to a settlement proposed by the broker, whereby the insurer paid $34,000 with the broker to add a further $2000 to “get the deal done”.

AFCA also rejected a part of the complaint related to dispute resolution rights advice, noting it was not satisfied the broker told the complainant “his only right of appeal was through court”.

An allegation that the broker had said it would pay for building and planning fees was not proven, with the product disclosure statement (PDS) showing that benefit was available from the insurer.

“Further, it does not appear that the complainant has yet met the PDS requirements to press the fees claim; supporting invoices have not yet been provided,” the decision says.

AFCA determined the dispute in favour of MGA Insurance Brokers and said no further action was required.

The decision is available here.