Junk excuse: cover denied after email confusion

A business that claimed for a damaged vehicle will not be compensated after a dispute ruling found the insurer was entitled to cancel its policy due to the complainant’s failure to respond to an email and pay the premium on the policy’s renewal.

Insurance Manufacturers of Australia declined the claim, saying there was no policy in place when it was lodged on November 9 2021.

The insurer said that the claimant’s policy expired on July 21 2021, after it failed to pay the annual premium by the policy renewal’s due date.

The insured, which said it held around ten policies with the insurer, said every policy was set with an auto-renewal for the premium to be paid monthly.

Insurance Manufacturers of Australia submitted a recording from the policy inception date where the insured is heard opting to pay the premium annually.

The insurer is heard informing the complainant that a company director would have to call back within 21 days of the call to confirm the policy and pay the premium, which it said did not happen.

The Australian Financial Complaints Authority (AFCA) said it was satisfied that Insurance Manufacturers of Australia “did not make a representation that the premium would be direct debited”.

The ruling also noted a cancellation notice sent to the complainant’s email address on June 19 2021, by the insurer, which said the policy would expire on July 21. In the letter, the insurer informed the policyholder that the annual premium payment was due by the expiry date.

The complainant confirmed it received the notice but said it went to its junk email folder, so it did not see or read it.

AFCA said that the insurer’s responsibility was only to ensure that the notice was sent to the recipient, saying that it acted in accordance with section 58 of the Insurance Contracts Act 1984 (Cth) and was entitled to cancel the policy.

“The insurer’s obligation is to send the notice, it does not extend to ensuring the notice is received and/or read by the complainant. I am satisfied the insurer complied with its obligation to send the reminder notice,” AFCA said.

“I am also satisfied the reminder notice satisfies the insurer’s obligation under the PDS to send written notice of cancellation of the policy.

“The claimed incident occurred on November 9 2021 which is after the policy was cancelled and outside the policy period.”

Click here for the ruling.