'Unambiguous instructions': broker wins dispute over damaged pontoon
A complainant who alleged that their broker breached its duty of care by selecting an inappropriate insurance policy will not be compensated after a dispute ruling decision went against it.
The riverside property lodged a complaint after discovering that Q-Sure Insurance Brokers had added a pontoon to its public liability policy but did not hold property damage insurance.
The complainant said the pontoon had been damaged by flooding in February last year and sustained an uninsured loss of $140,000.
The broker said that the property had only been covered by the liability policy since 2014, after the house on the land had been demolished and left vacant.
It said the property damage cover “could not continue” after the demolition and was replaced with a standalone public liability policy.
Q-Sure provided the Australian Financial Complaints Authority (AFCA) with an email it sent on August 3 2021 to the complainant’s financial controller that outlined that the property solely held a broadform liability policy that covered public liability, product liability and claim preparations costs.
“The notice was headed ‘Important Information about your Vacant Land Insurance policy’, specified broadform liability insurance as the policy type and the renewal date as September 12 2021,” AFCA noted.
A series of emails between November and December 2021 showed dialogue between the broker and a director of the property, who sought to add the pontoon onto the active insurance policy after its cover had been removed when the home had been destroyed.
“We have a pontoon on the above vacant property, and it seems that after the house was removed from the land, the insurance relating to the pontoon was also removed. Can this be rectified please?” the director said.
The complainant said that Q-Sure breached its duty of cover by not telling it that property cover was not available for the pontoon. It noted that the instructions it provided to the representative “was seeking the equivalent coverage that it held for the pontoon prior to the removal of the house”.
The broker argued that it acted according to the instructions provided by the complainant, noting emails from November 26 2021, that asked how to “add the pontoon [to] the policy”.
It acknowledged that it did not inform the complainant that the pontoon did not hold property cover in 2021 but said that it this was because it had already known that the broadform policy was implemented.
It highlighted instructions from the complainant’s financial controller in 2012 that referred to “the 2014 transition to Vacant Land Liability cover”.
Q-Sure said it made it “very clear” that it was only exploring liability cover for the pontoon and that at “no time during the relevant period did the insured raise any concern about the extent of the coverage being arranged’.”
The ruling acknowledged the policyholder’s confusion and intention to have the pontoon covered for property damage but said that the broker had not made an error in its actions.
“There is no mention in any of the complainant’s instructing emails to the broker to property damage insurance or a request for risk assessment advice,” AFCA said.
“Instead, the complainant wanted the pontoon added to ‘the policy’. The only existing policy was the liability policy.”
AFCA said the instructions were “consistent and clear”.
“I accept that the broker had a duty to clarify its instructions if they were ambiguous,” AFCA said.
“However, I am satisfied that a reasonable broker in the position of the broker would not have considered the complainant’s instructions ambiguous.”
Click here for the ruling.
