Broker cleared in case of cancelled policy

The owner of an earthmoving company has lost a case against his broker, who he claimed was liable for the theft of an excavator after a claim was denied.

The insurer rejected the claim because the man had not disclosed he had a criminal history.

In 2018, the complainant bought a mobile plant and equipment policy via NSW brokerage Teamcare Insurance Brookers. He renewed the policy several times before lodging a claim for his stolen earthmover a year ago.

But the insurer rejected the claim after finding he had criminal convictions dating back to 2014, including aggravated breaking and entering and a serious indictable weapon offence, as well as supplying a prohibited drug.

It cancelled his policy from inception and declined the claim on the basis of non-disclosure.

The Australian Financial Complaints Authority (AFCA) ruled that while the broker should have had better record-keeping practices, it did not breach its duty of care and it was the complainant’s own actions that had led to his loss.

“The complainant was ultimately responsible for the non-disclosure,” AFCA said.

“The provision of the proposal form to the complainant before the cover note became a formal policy with the request he sign and return it – which gives rise to a reasonable expectation the contents would be reviewed first – establishes the broker ultimately acted in a competent manner.”

The cover commenced in June 2018, initially via a 30-day cover note which came with information about his duty of disclosure and a copy of the proposal from the broker – which incorrectly said he did not have a disclosable criminal history.

The complainant was asked to review the documents and return the proposal, and the broker followed up a number of times verbally and by email about signing it. The man said he would sign the document but did not.

“The complainant was asked by the broker to advise of any amendments required. The complainant did not,” AFCA said.

“The complainant had the opportunity to correct the error in the proposal,” AFCA said. “Even if the broker breached its duty of care in setting up the policy, that breach would not have caused the complainant loss. By the time the excavator was stolen, the policy had renewed three times.”

Prior to each renewal, the broker provided duty of disclosure warnings and details of the disclosures previously provided to the insurer. The policyholder was asked by the broker to advise of any amendments required, and he did not correct the error concerning his criminal history.

“The complainant had an obligation to confirm that the details on which renewal terms were being offered were correct. He failed to do so. That repeated failure is the cause of the loss,” AFCA said, denying his request for compensation.

“It is that continuing non-disclosure that led to the policy cancellation and claim denial. His actions caused the stress and inconvenience.

“Any breach by the broker has not caused the complainant loss.”

See the full ruling here.