A couple seeking compensation from their broker for the value of their Polaris quad bike has lost a claim dispute.
The couple has farm insurance arranged through Benton Insurance Services. In mid-2020, they bought the bike for $9000 and asked to add it to the broker’s policy.
The following March, the bike was involved in an accident. The insurer deemed the bike a total loss and initially assessed a market value of $6500.
The couple considered that the market value should be at least $12,000 and following negotiations, the insurer agreed to pay the pre-accident value of $9000, less excess of $200 and salvage of $500.
The couple went to the Australian Financial Complaints Authority (AFCA), which said they asked Benton to insure the bike for $12,000 and sought compensation for the difference of $3000.
AFCA said the loss claimed was not caused by the broker’s actions and ruled it had followed the couple’s instructions when it both insured the bike and renewed for $9000.
Even though the broker insured the bike for $12,000, AFCA said the settlement was unlikely to change the outcome because the insurer ultimately determined its market value to be $9000.
The wife emailed the broker in June 2020 saying “Polaris is no longer in Australia … if something happens it will start at 12k min if not more … Please make sure our insurance is up to date.”
The broker replied in an email: “Can you advise on the insured amounts for the Polaris. I can’t find an agreed upon policy anywhere for these items. All insurers only offer market value. What is “new that cost me 9K”. Is it a Polaris ATV or something else. I’m not sure what you need.”
Husband’s reply was “yes the new one will cost me 9k”.
A broker’s invoice dated June 19 2020 attached a Schedule of Insurance stating that the policy was endorsed to add a new Polaris ATV with an insured value of $9000, and showed that the bike was insured for ” market value but limited to $9000″. The invoice was paid five days later.
The husband told AFCA that it should be clear that he was not happy with the $9000 sum insured from his earlier letter stating “no Polaris and $12K equivalent”.
The ombudsman ruled that it was reasonable for the broker to rely on the June 19 email to include the insured amount of $9000.
“The complainants did not clearly tell the broker that they wanted the bike insured for $12,000. They also did not ask the amount of the insured disclosed in the invoice and schedule of insurance before they paid it,” said the AFCA decision.
The couple renewed with a different insurer in May 2021, a few months after the accident. The invoice from Benton dated May 4 2021 stated that the unregistered 2020 Polaris Quad Bike had an insured value of $9000 or market value, whichever was less.
The couple gave examples of a 2016 model quad bike selling for $8995 and a 2017 model for $7990, as well as their newly purchased Segway quad bike purchased in September 2022 for $14,990, said they were the only type of quad bike available in Australia at the time.
AFCA was not satisfied that the market value of the Polaris bike was more than $9000 and said the examples were for bikes from earlier years and were “asking prices, not selling prices”.
“There is no information to show that the complainants inquired about the sum insured before the renewal of the policy,” the ombudsman said.
“I acknowledge the comments of the complainants about the lack of quad bikes, but they have not provided any additional information to show the market value or pre-accident value of the bike in March 2021 was $12,000 or more than $9000.
“The new bike they bought is not comparable – it’s a 2022 Segway not a 2020 Polaris.”
The husband said Benton increased the insured value of his other quad bike to $15,000 in 2022 after his issues with the bike claim, and argued that this was evidence that the insurer could have included a higher insured value in 2020 and upon renewal.
“I am not satisfied that this is the case,” the ombudsman said. “The insurer will probably only pay $9000 because it’s less than market value or $12,000.”
The owner of the bike also said that if the insured value was higher, the bike may not have been considered a total loss.
AFCA said that because the total loss was determined at market value – not the amount insured – it would not change the outcome.
See the full decision here.
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