The Australian Financial Complaints Authority (AFCA) has ruled Resilium Insurance Broking must compensate a claimant for storm-related damage to several greenhouses on his farm.

AFCA says the broker “breached its duty” by failing to arrange for a commercial farm cover according to the claimant’s instructions.

The claimant had told the broker he wanted cover that insured his greenhouses against all perils including storms, just as the previous policy from a different insurer had.

It was subsequently discovered the new policy had not been set up as instructed when QBE rejected a damage claim after a storm in October 2018.

Resilium then lodged a complaint against the insurer to AFCA on behalf of the claimant, submitting that QBE was aware the new policy must include cover for storm damage to the greenhouses.

But AFCA says the evidence provided by Resilium and QBE, including the exchange of correspondence leading up to the issuing of the new policy, suggests otherwise. It says Resilium failed to provide proof that QBE agreed to insure the greenhouses for all perils.

“The broker failed to follow the complainant’s instructions and to ensure the new insurance policy provided a level of cover which was adequate for the complainant’s needs,” AFCA says. “The panel has reviewed all correspondence and has found no indication the broker directly requested the greenhouses to be covered against all perils.”

It said the correspondence doesn’t show QBE would have agreed to provide the exact same cover as the previous insurer, and its policy wording was not the same as that of the previous insurer.

“In addition, the panel is of the view the responsibility for ensuring the appropriate cover is obtained rests with the broker.”

A forensic engineer estimated about 30% of the greenhouse damage – the equivalent of about $128,700 – was directly caused by the storm. The remaining 70% was linked to long-term maintenance issues.

AFCA determined Resilium must compensate the claimant based on a formula built around the claimable repairs of $128,700. The formula takes into account variances in building works and a tax credit for GST.

Click here for the AFCA ruling.