A breeder who attempted to make an insurance claim for loss of use after her Angus bull was declared infertile has lost her case.

She held an IAG livestock policy covering the bull for accidental death, and on May 4 2018 a third section of cover for “loss of use” was added to the policy.

Five days later, the breeder received the results of a veterinary bull breeding soundness examination, which had been undertaken more than a week before the policy was extended. The results showed the bull was infertile.

Adjudicating on appeal against IAG’s decision to decline the claim for “loss of use”, the Australian Financial Complaints Authority (AFCA) has ruled the loss of the bull as a breeding animal “had already occurred before cover was even contemplated”.

“As the bull…was already impotent, the benefit is not triggered,” AFCA says. “In order for the cover to be triggered, [it] must become impotent during the period of cover. The cause of the impotency must also be due to either disease or accident.”

The breeder, who said she had tried to get ‘loss of use’ cover earlier but was told by IAG she needed the breeding soundness check first, lodged her claim in November last year after further tests found the bull had only 23% normal sperm.

IAG said the bull was impotent before the cover for loss of use was added to the policy, and refunded the premium paid for the cover.

AFCA says the insurer was entitled to decline the claim “because the material shows, on balance, that the bull was impotent (as defined) before the insurer came on-risk”.

“As the loss occurred outside the period of cover, the insurer has no liability for the claim. “

Even if the validity of the claim had been established, under the terms of the policy the loss would only have been covered where the impotency had been caused by accident or disease. In the case of the unfortunate Angus bull, the cause was undetermined.