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Determination
Case number | 976113 |
Financial firm | Arthur J. Gallagher & Co (Aus) Limited |
Case number: 976113 30 April 2024
The complainant held a Transit and Storage Insurance policy arranged through a removalist KR who are authorised representatives of the financial firm AJG who in turn act as an intermediary of the insurer.
The policy provides cover for accidental loss or damage while in transit. The complainant submitted a claim for loss and damage on 3 March 2023 totalling $55,250. The insurer accepted liability and after assessment of the loss, offered to settle the claim for $15,401.
The complainant says AJG and KR breached the relevant regulatory and code regulations. She says she was not informed of the sum insured or clearly informed of the $3,000 limit per item. The complainant seeks payment of her claim in full plus compensation for the stress and inconvenience.
The complainant has a separate complaint with the insurer before AFCA, complaint no. 1006312. This determination follows the determination in complaint 1006312.
No. While the policy documents clearly inform the complainant of the sum insured of $33,000, the documents do not clearly define what items need to be declared specified valuables.
No. I have determined the insurer is liable to pay compensation in Determination 1006312. As AJG is the insurers intermediary there is no further entitlement to compensation.
Based on the information exchanged, it is fair to accept the complainant was not clearly informed of the terms and conditions of the policy. The policy documents failed to clearly define what needs to be declared as specific valuables.
I have, in determination 1006312, found that the insurer is liable to pay compensation based on the sum insured of $33,000. I have also determined the insurer pay compensation for non-financial loss due to the claims handling. In the circumstances, as AJG is the insurers intermediary it would be unfair to pay compensation beyond that payable under determination 1006312.
This determination is in favour of the complainant.
The complainant was not clearly informed of what items need to be declared specified valuables and is entitled to be compensated based on the sum insured. As this has been determined in complaint 1006312, no further action is required in this matter.
No. While the policy documents clearly inform the complainant of the sum insured of $33,000, the documents do not clearly define what items need to be declared specified valuables.
Circumstances of claim
On 3 March 2023, the complainant lodged a claim under the Transit and Storage policy held with the insurer for missing and damaged home contents following the delivery of her contents form NSW to Victoria by KR. There is no dispute that that nine items were either missing or damaged.
The damage report completed by the complainant details:
The insurer had MA assess the claimed damage. MA agreed with the estimate for items valued at less than $3,000. For the remaining items namely the Lounge, Chaise Lounge, King Bed and Table, while not disputing the estimate (and acknowledging the items may not be repairable) noted these were non-specified items. MA says the policy limit of $3,000 applies to each item. The insurer, based on MA’s assessment, offered to cash settle the claim for $15,401, which the complainant rejected.
Policy arranged through online portal
In December 2022, the complainant engaged KR (removalist) to move her home contents. KR were also authorised representatives for AJG and authorised to arrange transit and storage insurance. AJG were responsible for KR’s conduct but acted as an intermediary for the insurer.
After discussing the complainant’s insurance needs, KR sent an email to the complainant on 28 December 2022 and 11 January 2023 with links which refers to a quote for removalist services and quote for insurance cover; and the online form/declaration.
The link, provided the complainant information about the terms of the policy and confirms insurance cover offered is a nominated value of $33,000 based on the volume method.
The complainant then went online to complete the online insurance declaration for the proposed policy. The online insurance declaration notes the complainant accepted the policy on 12 January 2023 with a nominated value of $33,000.
Each step of the online declaration forms requires the complainant to select the terms of the policy and discloses the cover offered at the completion of the online form. The online form provided links to the insurer’s Product Disclosure Statement (PDS).
Declaration — I declare that the above items and values are correct to the best of my knowledge and that I have informed KR about anything that could affect the risk. I have received a copy of the Financial Services Guide (FSG), Product Disclosure Statement (PDS) and Insurance Policy Wording.
FSG, PDS and Duty to not Misrepresent
Please accept this declaration and terms and conditions by typing your name here.
Policy documents misleading
The Insurance declaration confirms the policy covers valuable belongings against accidental loss or damage from an external cause.
Under the section headed “Replacement Cost” the declaration confirms in the event of damage, the reasonable cost of repairs or restoration will be covered. For items totally lost or destroyed full replacement cost will be paid if under 10 years old. For items over 10 years old, computers and computer accessories and clothing the policy provides cover for market value. For items declared as valuables and items declared under specified items method the sum insured is limited to the declared value nominated for on the insurance declaration
It is reasonable to accept that most household items other than specified valuables would be insured for the replacement cost.
The insurance declaration then invites you to calculate your insured value based on the volume method or valuation method (the compliant selected the volume method) and select your excess. The volume method covers the contents based on the volume of the consignment by minimum average cubic metres value of $2,200 multiplied by cubic metres. Insurance declaration confirms the volume was assessed as 15 cubic metres and the sum insured of $33,000. Under this section you are advised that “in addition to this you must list any items valued at over A$3,000 specified in the Valuables Clause which is then added to the cubic metre value sum to arrive at the total declared value.
You are then invited under Step 2 to list specified valuable items such as any antique, curio, jewellery, plates, precious objects, art, metals, collectables including stamps, coins precision equipment or similar. For items over $3000 you're invited to list the items and value in the table below.
The reference to items over $3,000 is consistent with a reference to the items described as specified valuable items in the list included in step 2. Presumably this is the “Valuables Clause”. The insurance declaration does not clearly inform an insured that they need to specify any item valued at over $3,000. It only requires you to specify those items specified in the valuables clause, i.e. jewellery, antiques, art collectables etc. The complainant did not list any items under step 2. The complainant says the process is misleading as it does not refer to items such as lounges, beds or tables. I agree.
The insurer in complaint 1006312 says the policy documents need to be read together. The complainant acknowledges, in the declaration, that she has received the documents.
The product disclosure statement (PDS) includes the limits and exclusion from cover. Included under the limits, restrictions and exclusions are valuables worth more than $3000. The policy refers to cover being limited to a maximum of $3000 unless listed and valued in the insurance declaration.
Under definitions, the PDS defines valuables as any antique, curio jewellery, plate, precious object, musical instrument, work of art, medal, collection of items, fur or piece of precision equipment, or any one item, pair set or collection. This is different to the items referred to in the insurance declaration. It is argued that reference to any one item, pair, set or collection covers normal household furniture. I do not agree.
The definition refers to items I would broadly describe as collectibles. It does not refer to typical household items such as lounges, tables or beds. When read in conjunction with the insurance declaration it is reasonable for a person to believe that only items such as those described under the insurance declaration as specified valuables need to be listed.
While I accept the complainant was informed of the sum insured of $33,000, I do not accept the policy documents clearly informed the complainant of the need to specify items such as the lounge, chaise lounge, bed or table. The documents, when read as a whole, give the impression that it is only necessary to list the specified valuable items referred to in the insurance declaration if you want to insure them for more than $3,000. It is reasonable to understand from this that all other items are insured for the replacement cost, as defined, up to the maximum sum insured.
I am not satisfied the process employed by KR through the portal is sufficient to clearly inform the complainant of the terms and conditions of the policy.
I find the information provided in the insurance declaration misleading as to what is required to be declared a specified valuable. I find the reference to the Valuables Clause and the list of valuables under the specified valuables items inconsistent with the definition of valuables in the PDS.
The definition of valuables in the PDS is consistent with the items often described as collectibles such as jewellery, rare objects such as arts or collections. The definition is not consistent with typical household appliances or furniture.
Having reviewed the documents, I am satisfied the complainant was not clearly informed of the need to declare any item valued at over $3,000 as a specified valuable. I accept it was reasonable for the complainant to consider the disputed items would be covered under the replacement cost subject to the total sum insured.
No. I have determined the insurer is liable to pay compensation in Determination 1006312. As AJG is the insurers intermediary there is no further entitlement to compensation.
While I accept the process in obtaining the Transit and Storage cover was misleading, I do not accept it has caused and additional entitlement to compensation under the policy beyond the sum insured.
I accept based on the information exchanged that the complaint was aware the sum insured was $33,000. The complainant was satisfied with the sum insured and satisfied it covered her contents.
Determination 1006312 determines the insurer should increase the offer of settlement to $33,000 less the $1,000 applicable excess. Interest under section 57 of the Insurance Contracts Act 1984 (Cth) is payable on the settlement of $32,000 from 17 April 2023 to date of payment of the claim. It also determines the insurer should pay compensation for non-financial loss of $1,500.
I am satisfied this is sufficient to settle the complainants claim against AJG and the insurer. No further compensation is payable.
Based on the information exchanged, it is fair to accept the complainant was not clearly informed of the terms and conditions of the policy. The policy documents failed to clearly define what needs to be declared as specific valuables.
I have, in determination 1006312, found that the insurer is liable to pay compensation based on the sum insured of $33,000. I have also determined the insurer pay compensation for non-financial loss due to the claims handling. In the circumstances, as AJG is the insurers intermediary it would be unfair to pay compensation beyond that payable under determination 1006312.
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
The respective parties have completed a full exchange of the relevant information, and each party has had the opportunity to address any issues raised. We have reviewed and considered all the information the parties have provided.
While the parties have raised several issues in their submissions, we have restricted this determination to the issues that are relevant to the outcome.
AFCA is not a court of law. We do not have the power to take or test evidence on oath, or to require third parties to give evidence.
When we assess complaints, we consider:
We give more weight to documents created at the time the events occurred. If there are no relevant documents, we will decide what most likely occurred based on the available information.
If there are conflicting recollections and these are evenly weighted, we may find that a claim cannot be established.
The complainant has raised several issues relating to breaches of relevant regulations and the General Insurance Code of Practice.
AFCA is not the Regulator and does not determine if there was a breach of the regulations. AFCA is not the General Insurance Code Committee and does not have powers to determine a breach of the code.
AFCA does however consider the relevant regulations and industry codes when determining a complaint.
