A complainant whose caravan was washed away by floodwaters has lost a challenge to increase his insurance payout above the agreed value on his policy.

The policyholder lodged a claim after floods severely damaged the caravan in March last year, and the vehicle was assessed as a total loss.

RACQ Insurance paid the insured $54,000, the agreed value for the vehicle as listed on policy documents, minus the $650 policy excess. 

But the claimant argued that the caravan had a market value of $80,000 and lobbied for the insurer to increase the paid sum. 

Policy documents show that the man first insured the vehicle in February 2021, under an agreed value of $60,000 or the market value if it had been lower.  

RACQ Insurance sent the complainant a renewal notice on January 5 last year, informing him that it had “revalued” the agreed amount to $54,000 to account for changes to the vehicle’s age and condition. 

The Australian Financial Complaints Authority (AFCA) heard the insured paid the renewal premium a few days later and did not ask RACQ Insurance to change the agreed value until after the claimed incident.  

The complainant said he believed the renewal policy was “a continuation” of the initial contract and argued that the renewal notice, which had been 10 pages, was unclear about the revaluation.  

But AFCA dismissed the insured’s contention, saying that the first page of the notice “clearly stated the policy terms had changed,” and acknowledged that even if the value had not been modified, it would have still been well short of the amount sought by the complainant. 

“In my view, the notice was not unreasonably long, and it showed the relevant policy terms clearly and unambiguously,” AFCA said. 

“Furthermore, the first page of the notice said the sum insured had been ‘revalued’, advised the complainant to check that it provided the right amount of cover, and said he could contact the insurer to change the sum insured at any time.

“The renewal notice clearly stated the relevant policy terms, and the complainant agreed to the terms when he paid the premium.

“If he had not agreed to the terms, the policy would not have been renewed, and the caravan would not have been covered at all.” 

The ruling said RACQ Insurance did not mislead the policyholder regarding the policy terms and agreed that its decision to settle the claim for the agreed value had been fair. 

Click here for the ruling.