A complainant who was stood down because of the pandemic and subsequently made an unsuccessful claim for unemployment benefits under his loan protection policy, believing his circumstances fell within the scope of coverage, has lost his bid to have the decision overturned.

The Australian Financial Complaints Authority (AFCA) agreed with the reasons outlined by The Colonial Mutual Life Assurance Society for declining the claim, ruling the policy’s product disclosure statement (PDS) set out the conditions that must be met in order for a claim to be accepted.

An extract of the PDS contained in the AFCA ruling listed the “defined terms” for unemployed and unemployment. One of the terms says an insured will qualify for coverage if he or she has been terminated from their permanent or casual jobs and is actively seeking work.

In the case of the complainant, he is not covered as he remains “employed” in the eyes of the law despite being stood down from April 27 last year until January. He confirmed he applied for and received JobKeeper payments from the Government.

“The insurer says that the complainant has not been terminated and remains employed but is not working until his skills are required,” the AFCA ruling said.

“The insurer further says that this is consistent with the information provided by the Australian Government Fair Work Ombudsman statement that employees that are stood down remain employed during the period of the stand down.

“The circumstances of the complainant’s situation do not mean that his employment has been terminated and therefore he is not covered under the terms of the policy.”

AFCA was not persuaded by the complainant’s arguments that he was informed that he would be covered for all uncertain reasons including natural disasters where situations go beyond the control of the employer.

The financial dispute body says the policy coverage is not absolute and is subject to the details contained within the PDS.

Click here for the ruling.