Defeated complainant says broker 'was aware' overseas business required insurance
A complainant has lost a dispute despite insisting its claim for business losses arising from a stock purchase in China should be accepted since its insurance broker was provided with detailed information about its overseas operations.
The Australian Financial Complaints Authority (AFCA) upheld IAG’s decision to decline the claim, ruling the business policy arranged by the broker – whose identity is not provided in the dispute outcome – does not respond to loss or damage outside of the country.
AFCA says the policy also contains a “Geographical Limitations” general exclusion that states the insurer will not pay for any loss or damage to the insured property if it is not located in Australia, unless specifically stated otherwise in any cover section.
The external dispute ombudsman acknowledges the complainant’s position that “comprehensive” information in relation to the overseas aspect of its business had been provided to the broker.
But it points out the policy documents do not reflect the complainant’s expectation in this regard.
“Whilst there is no basis to dispute the complainant’s position that it explained its business to the broker, the available information does not show the policy covered the overseas stock under the business property section,” AFCA says in its ruling of the dispute.
“If the intention was to cover the complainant’s overseas stock for loss or damage, the policy documents unfortunately did not reflect that.”
The complainant had lodged the claim under its business policy after purchasing stock from China and the manufacturer failed to deliver the goods to the complainant’s client in Poland.
The complainant was also seeking business interruption losses, which were declined by IAG on grounds the policy did not provide for such coverage.
Details provided in the AFCA ruling shows the policy’s Business Property section only covers for loss or damage to stock at the premises from which the insured runs its operations.
“The premises on the schedule is in Australia. It is clear the loss to the stock occurred overseas,” the AFCA ruling says.
And while the policy includes an “Imported Goods” clause that refers to covering items outside of Australia, AFCA says the complainant’s loss is excluded since it is not a liability claim.
AFCA says the “Imported Goods” provision under the Public and Products Liability section of the policy schedule falls outside of the scope of loss sought by the complainant.
“This is because there is no indication a third party is seeking compensation from the complainant for something it is legally liable to pay,” the AFCA ruling says.
“Therefore, I accept this exclusion is engaged both in terms of the complainant’s claim for the loss to the stock and the resultant business interruption claim.”
Click here for more the ruling.
