General Insurance - Domestic Insurance - Home Contents - FSP Decision - Denial of claim

Transcription

1 Determination Case number: General Insurance - Domestic Insurance - Home Contents - FSP Decision - Denial of claim 28 September 2011 Background 1. The Applicant insured his contents which were being stored at a storage facility whilst he was overseas under a home policy held by the Financial Services Provider (FSP). 2. A claim was lodged against the policy on 17 January 2011 for flood water damage to his contents following wide spread flood damage. 3. The Applicant was informed that as the policy did not cover damage caused by flood, he would not be indemnified for the loss and damage to his contents. 4. The Applicant states that as his insurance schedule clearly states that he was covered for fire, storm/water/wind and basic perils (impact, explosion, aircraft, riot, civil commotion, strikers, malicious damage) he is entitled to be indemnified for the loss and damage to the contents regardless if the damage was caused by flood. Summary of Applicant s Position 5. The Applicant states that as per his insurance schedule he is covered for damage caused by storm and water. 6. The Applicant states that he never received a copy of the policy wording at inception and the FSP has failed in its obligation at law to provide him a copy of the policy wording at each renewal period. 7. The Applicant states that as the policy schedule does not state any limitations or exclusions to the cover, it was reasonable for him to expect that he was covered for damage caused by any water, whether it be flood or not. 8. Accordingly, the Applicant states that he should be indemnified for the loss which was $72,500 under the terms and conditions of the policy. Case No: Determination Page 1 of 6

2 Summary of FSP s Position 9. The FSP states that the terms and conditions of the policy clearly state the cover does not extend in instances where loss or damage has occurred as a result of flood. 10. Whilst the FSP accepts that the Applicant s policy schedule clearly stated the limitation of cover for the contents as they were in a storage facility, it notes that the schedule clearly stated that it must be read together with the terms and conditions of the policy. 11. The FSP states that the expert report confirms that the ingress of water occurred specifically as a result of flood and therefore it is not required to indemnify the Applicant for the loss under the terms and conditions of the policy. 12. The FSP relies on the following policy provisions: Exclusions to your cover Any cover we provide is subject to the following exclusions.... We will NOT cover any loss or damage as a result of, or caused by... flood Issues 13. Whether the Applicant is entitled to be indemnified for the damage to his contents under the terms and conditions of the policy. 14. Whether the FSP has proven its derogation notice, as per section 35 of the Insurance Contracts Act (1984), per medium of its PDS was provided to the Applicant. Reasons for Decision 15. The Panel is satisfied that a full exchange of information has occurred between the parties and each party has had the opportunity to address all the issues raised. 16. Having carefully read the terms and conditions of the policy, the Panel is satisfied that the policy, as expanded by the PDS does not provide cover for loss or damage that has been caused as a direct result of flood. 17. The Applicant has stated that as his policy schedule clearly stated he was covered for damage caused by storm and water, then he is covered for the damage to his contents. Case No: Determination Page 2 of 6

3 18. Further, the Applicant has stated that he did not receive a copy of the terms and conditions of the policy, as expanded by the PDS and that the FSP has not acted legally, in not providing a copy of the PDS at each renewal. 19. In respect of policy renewal, the Panel observes that, subject to satisfactory proof of PDS provision at policy inception, section 11(10)(a) of the Insurance Contracts Act (1984) relieves the FSP of any future obligations in this regard. 20. The FSP notes that whilst the policy schedule outlines the limitations of the Applicant s cover due to where the contents are situated, the policy schedule clearly states that the policy schedule has to be read together with the terms and conditions of the policy (in other words the PDS) to be aware of the complete cover under the policy and any exclusions or limitations that may apply to the policy. 21. The Panel has had close regard to the submissions provided by both parties. The policy schedule clearly states under important notices : POLICY AMENENDMENTS These amendments should be read in conjunction with your policy booklet as the terms described now form part of your policy 22. The Panel accepts that the onus is on the Applicant to carefully read both the policy booklet (PDS) and insurance schedule to ensure that he is aware of what he is covered for and any limitations or exclusions that may apply to his cover. 23. It is noted that the Applicant has provided a Statutory Declaration stating he never received a copy of the policy booklet (PDS) at inception or at renewal. 24. The FSP s has placed its business through an intermediary. In this dispute, the policy was placed through X-Y Insurance Pty Ltd. Based on the information exchanged, the Panel is satisfied that X-Y Insurance Pty Ltd was at all times acting as an authorised representative of the FSP. 25. Initially, the FSP provided two Statutory Declarations in response to the Applicant s Statutory Declaration. The first Statutory Declaration (SD1) is dated 29 July 2011 and is provided by Ms H. This Statutory Declaration asserts that the relevant PDS was posted to the Applicant on 19 April It does not explain how this position can be asserted. A second Statutory Declaration (SD2), also from Ms H is dated 26 August This Statutory Declaration refers to screen dumps purporting to demonstrate that the PDS was sent to the Applicant on 19 April It does not explain how the screen dumps allow you to form that opinion. 26. It was the Panel s view that neither of these SDs were sufficiently compliant with FOS Circular 3 Despatch of Documents, to permit of it to reach a conclusion, that on the balance of probabilities, the FSP could demonstrate that its authorised representative (X-Y Insurance Pty Ltd) had complied with its section 35 obligations by providing the Applicant with the PDS. The Panel was aware that the FSP operated through an intermediary on inception and renewal of the policy. In view of this and to ensure fairness in the process the FSP was asked to provide appropriate information to demonstrate that it, through its Case No: Determination Page 3 of 6

4 authorized agent had complied with section 35 of the Insurance Contracts Act (1984). 27. The FSP in an to the Panel Chair on 14 September 2011, advised that it could not provide a Statutory Declaration to prove despatch by post on any given day that a PDS went out but maintained that this was not necessary. The FSP relies upon the majority decision in Marsh vs CGU Limited ( ANZ insurance cases) to argue that it is not necessary to prove evidence of postage, but it is sufficient to establish evidence of a system. That is evidence of the general course of business or of an office system in order to show that what would ordinarily have been done in a particular set of circumstances. The FSP argues consistent with the decision in Marsh s case that from this a Court (Panel) may be entitled to infer that what would have ordinarily have been done was done on this occasion, it being more probable than not that the general course would have been followed in the particular case. 28. The Panel does not dispute the FSP s argument with respect to proof of dispatch. In fact in the Panel s view Circular 3 that was issued in July 2010 (it follows from similar practice notes issued by the Insurance Ombudsman Service as it was then known) is consistent with Marsh s case. 29. On 15 September 2011, the FSP provided a third Statutory Declaration, this time by Mrs F as office manager of X-Y Insurance Pty Ltd. Mrs F deposed that she had 22 years insurance industry experience and had been with the X-Y Insurance Pty Ltd for seven years. She described the dispatch of the PDS as follows: a. If an Applicant seeks insurance over the phone our standard procedure is to post an applicant (proposal and a PDS to the Applicant within 24 hours). b. If the Applicant has facilities the PDS and application is ed at the time of application. c. If there are any changes to an insurer s product we again send a new PDS to the Applicant upon renewal (without exception). 30. Mrs F further states that the Applicant s computer records date back to Mrs F deposed that a new PDS was sent to the Applicant on 24 April 2009, a further PDS sent on 19 April 2010 and a further PDS sent on 19 April Mrs F deposed that in accordance with the standard business practice, a PDS would have been sent to the Applicant upon inception and subsequently. 32. Attached to the Statutory Declaration is a screen dump. The first screen dump is headed invoice. It has a drop down screen which referred to PDS history, within that history, under date issued is 19 April 2010, Mrs F maintains that this establishes that the PDS was sent. Mrs F has not explained how this PDS history establishes that the document was sent. 33. It is unclear from the Statutory Declaration as to what the process is for the agent to ensure that the PDS is in fact printed and sent to an insured. It is Case No: Determination Page 4 of 6

5 unclear whether the PDS is forwarded to the agent by the FSP and then downloaded at the same time as creating the invoice and dispatched with the invoice to the consumer at the same time. The Statutory Declaration is silent on this process. 34. The Panel accepts the proposition that evidence of the general course of business or of an office system is admissible in order to show what would ordinarily be done in a particular set of circumstances. The Panel accepts that from this the Panel may be entitled to infer what would ordinarily have been done, was done on this occasion. In drawing such an inference, however, it is important to look at the evidence that is presented. 35. In the Marsh case, there was evidence presented from the FSP that a copy of the renewal notice with a policy attached addressed to the appellant was dispatched to the broker. There is no evidence from the FSP in the current matter as to what process they had for dispatch of the documents, if any to X-Y Insurance Pty Ltd. 36. In the Marsh case, there was evidence that the FSP had at least observed the intermediaries process. In the current dispute, no evidence has been provided by the FSP that they had any method of auditing the process adopted by the intermediary. 37. Critically, the evidence in the March case established that the renewal notice had the policy attached when dispatched by the FSP to the intermediary. There was no dispute that the renewal notice had been received by the appellant. In the current matter, the FSP has not provided any evidence as to how the renewal notice was sent, if in fact a renewal notice was sent, whether the policy documentation was attached to the renewal notice and if so how the renewal notice was paid. Information in this nature would have assisted the Panel significantly. 38. Finally, in the Marsh case, the appellant did not say she did not receive the policy only that she had no recollection of having done so, admitting that if she had received it she would not have read it. In the current dispute, it is the Applicant s Statutory Declaration that he did not receive the documentation. He does not dispute having received the invoice. The Applicant admits that his last invoice on 19 April 2010, was invoice number The Applicant has repeated on a number of occasions that the invoice was the last written official correspondence he had received from the FSP. The invoice identified the policy variations and extensions including whilst contents are in storage, cover is restricted to fire, storm/water, wind and basic perils (impact, explosion, air craft...). Further, the Applicant maintains that it was only after he contacted X-Y Insurance Pty Ltd to report the damage that they offered to send him out a policy document as he had not received one before. 39. The FSP has stated that its system is designed to comply with the decision in Marsh s case. The Panel is of the view that the system as evidenced in the current matter by the Statutory Declaration does not comply with Marsh s case as it does not provide sufficient information to the Panel on which an inference Case No: Determination Page 5 of 6

6 can be draw that on the balance of probabilities it was most likely that the policy documentation had been sent to the Applicant. 40. As the Panel has determined that the FSP has not provided sufficient evidence to establish on the balance of probabilities that the policy documentation had been provided to the Applicant prior to the loss, it follows that the FSP has failed to comply with section 35 of the Insurance Contracts Act (1984). In these circumstances the Applicant is entitled to the benefits of the prescribed standard cover under the Insurance Contracts Regulations (1985). Pursuant to division two, Home Buildings Insurance Regulation under Regulation 10.10(a)(xi), flood is one of the prescribed events for which cover is provided. Pursuant to Division 3 Home Contents Insurance Regulation 14(a)(xi), flood is also a prescribed event under Home Contents Insurance. It follows therefore that the policy must respond in this case to indemnify the Applicant for his loss. Determination 41. On the basis of the available information, the Panel determines that the FSP is to indemnify the Applicant pursuant to his policy; the Panel notes the sum insured of $72,500 (less $100 excess) has been claimed by the Applicant. The parties are enjoined to work co-operatively and speedily to establish the quantum of loss, in the knowledge that catastrophic events like those affecting Queensland in 2010/2011 do not always permit of the observance of all technical niceties such as invoices and the like. Case No: Determination Page 6 of 6