A farmer who says a fungal disease outbreak that reduced the harvest yield for his faba bean crop was caused by a hailstorm has lost his claims dispute.

The complainant lodged the claim on July 26 2021, for a loss of potential yield after his crops had been damaged by a hailstorm a few days earlier.

The insured held a broadacre crop policy, which defined a “potential yield” as the average harvest produced per hectare if the insured event did not occur.

Primacy Underwriting Management accepted that the hail likely caused some damage and engaged with its agricultural loss assessor, referred to as CA, to determine the extent. 

The loss assessor’s agronomist reported that the crops sustained “light” hailstone damage, instead noting browning on leaves, which indicated some form of fungal damage or chemical burns from a herbicide.

Further investigations from CA concluded that the “main impact evident on the crop was due to fungal and chemical burn,” and that the hail had only caused “cosmetic leaf damage” that did not impact the achievable yield.

The complainant says the hailstorm created an entry point for the fungal pathogens to enter and damage the crops. He says he recognised that the disease had impacted the crops and sprayed fungicide to minimise the damage, but it wasn’t effective.

Primacy declined the claim, highlighting that its policy has exclusions for losses caused by diseases, including those that arise “as a consequence of an insured event”.

The claimant provided findings from a separate agronomist who monitored the property since 2018, who says the crops sustained hail damage earlier in the season. The agronomist says 2021 was a “low-pressure disease season” and that the fungicide had been robustly applied and effective.

The insured acknowledged that the harvest loss was “caused by a number of factors” but maintains that the disease losses were “as a result of the hail” and says he was “not claiming diseases as such”.

However, the Australian Financial Complaints Authority (AFCA) says the policy exclusion had been explicit that it would not cover disease losses even if insured events caused them. The ruling also highlighted that the claimant and his agronomist held contradictory opinions about the effectiveness of the fungicide.

“The complainant has stated on multiple occasions that the hail damage led to the crop being affected by fungal disease, which adversely impacted on its yield,” AFCA said.

“The disease exclusion set out in the PDS precludes cover for losses that have been caused by disease, even disease that arises as a result of (in this case) hail,” AFCA said.

“I am therefore satisfied that the insurer is entitled to deny the claim.”

Click here for the ruling.