A man who lost a gold necklace he insured for $31,500 rejected his insurer’s offer to pay him just over $15,000.

QBE accepted the claim under a home and contents policy and planned to have its panel jeweller, referred to as P, arrange a replacement.

The claimant requested a cash settlement instead, so the insurer offered $15,048, based on the cost the jeweller quoted for the replacement. The claimant then demanded the full sum insured, and questioned the competence of the jeweller.

However, in a dispute ruling, the Australian Financial Complaints Authority says the insurer’s approach was consistent with the policy wording.

“The relevant consideration for the purposes of the complainant’s claim is the actual cost the insurer would incur to replace the necklace,” AFCA’s ombudsman writes.

“The sum insured, the premium paid for that sum insured or a necklace’s ‘retail price’ are not relevant considerations.

“I acknowledge the complainant does not feel confident with P and believes its proposed replacement necklace is ‘inferior’. I also acknowledge he provided a screenshot showing that a former customer had left a one-star review for P some two years ago.

“I am not satisfied these matters entitle the complainant to the outcome he seeks.”

The ombudsman notes the insured recently provided more information about the nine-carat, 60cm necklace. An amended certificate of purchase shows it weighed about 156g, whereas P’s quote was based on a 150g necklace.

AFCA says the insurer should reassess the lost necklace’s replacement cost based on the updated specifications.

It has dismissed a request for additional compensation, noting most delays were “primarily because the complainant wanted a claim outcome he was not entitled to”.

See the full ruling here.

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