AFCA to offer huge compensation after broker ignores claims – The Broker 2 – Insurance News

A retailer who failed to act on instructions from a businesswoman to arrange insurance for several items has been ordered to pay compensation by the company’s judge, even though her request for $40,000 in legal fees was denied.

The Australian Financial Complaints Authority (AFCA) said Oxford Insurance Brokers failed to provide cover for two Mercedes Benz, the house and its contents including a diamond ring, director and officer (D&O) cover, and firewood.

The seller said they either did not receive the requests, did not return the documents for the cover to be installed, or did not provide the invoices for the requested insurance.

But the AFCA ruled that the broker had breached his duty of care and that his client had suffered distress and hardship as a result of his failure. It presented a significant non-financial loss of $5400.

“The broker’s failures are significant and the plaintiff should be awarded substantial compensation,” AFCA said.

“The dealer led the complainant to believe that he had insured one of his vehicles when he did not. They couldn’t be sure which items were covered by insurance and which were not.

“The plaintiff spent a lot of time trying to verify if his vehicles were insured (and) had a lot of trouble responding to the debt collection notices that the insurance company issued and seeking to be removed from the debt list.”

However, the businesswoman, who owned a trucking company, was denied reimbursement for a December 2020 car accident involving two trailers that was registered by another person, seeking $144,516.

AFCA noted that it admitted on a D&O application a month later that a claimable event had occurred, and said that “fortunately” the broker’s inaction did not cause problems.

“It would be very unusual for an insurance company to accept a pre-existing dispute,” the ombudsman said. “I agree with the broker that it is possible that the insurer – if a claim had been sent – would have refused to pay the fine.

In this case, the broker is not responsible for losing the plaintiff.

The businesswoman was only informed that she was uninsured when she unexpectedly received a notice from the insurance company that her payment was overdue, followed by debt collection notices and a list of outstanding bills.

He did not know what the information was about because the broker had issued a certificate of insurance on his title as proof of another insurance. No actual certificate of insurance from the insurer was attached but he believed he was insured by the agent based on correspondence with his broker.

The insurance agent had no record of it. They checked all the major insurance companies and found that they were uninsured.

The seller, who admitted that he did not take notes on conversations with customers, denied any wrongdoing and showed AFCA invoices. They refused to receive invoices in the post.

“There is no proof of the invoice,” said the ombudsman. “I accept what the complainant has given and his evidence. The dealer led the plaintiff to believe that he had insurance for the 2019 Mercedes because he gave him a certificate of insurance…

The seller denied receiving the home with its contents, but AFCA said that unless he had read the April 2020 email, he would not have known that he had requested a cover for the engagement ring he mentioned later.

Also, he sent an email to the broker on the same email address that he successfully used to contact AFCA.

“The dealer says that he did not receive the complainant’s requests for insurance because he did not receive various emails. I do not accept this,” the ombudsman said.

“There is no documentation to show that the broker took any action to arrange the requested insurance.

“This failure is significant and would have caused the plaintiff substantial damages under different circumstances.

“This is not what AFCA would expect from a professional broker who would serve his client.”

See full resolution Here.