Coverforce has won a dispute with a gym franchisee who argued insurance policies arranged by the broker should have provided cover for an email scam.

The franchisee transferred $11,779.33 to an incorrect account after receiving a fraudulent email, allegedly from a leasing agent, advising of changed banking details.

The broker was asked by the client to lodge claims under the liability and property insurance policies for the money lost in the cyber fraud.

But both were declined as there was no cover under the policies for that type of loss, leading the client to argue the broker had breached its duties in not arranging appropriate insurance for the business.

The Australian Financial Complaints Authority (AFCA) says Coverforce was asked by the franchisor to provide an insurance package for franchisees under an “opt-in” basis, with businesses free to seek cover elsewhere if they preferred.

The complaining franchisee was given the opportunity to participate in 2015 and accepted renewal offers from 2016 to 2019.

At the last of the renewals, the gym queried values in areas such as contents, stock limits and gross profit figures, and requested reduced cover to lower the premiums.

The broker says it asked the franchisee to review the schedules to make sure the cover entered into met its requirements.

“There is no evidence that the complainant asked for changes to its cover that would cover the loss claimed,” the AFCA adjudicator says. “I am satisfied the complainant had the opportunity to check the scope of cover, and that it did review its cover.”

The complainant says it was told it was “fully covered from any, loss, damage, or theft” but AFCA says no information is available showing that advice.

“It is also important to note that insurance does not provide cover for all loss or damage,” AFCA says.

“All insurance policies are necessarily subject to terms, conditions, and limits to the type and scope of the cover provided, as set out in the policy documents provided to the policyholder.”

AFCA says the broker has not made an error or breached its duty of care in arranging cover for the complainant that did not respond to financial loss due to an email scam.

The decision is available here.