A man who sent his watch to a scam buyer will be covered for his loss after the complaints authority overturned his insurer’s claim denial.

The claimant had insured the watch for $7000 under a portable contents cover included in his home and contents policy. He lodged a claim in October last year after failing to receive payment for the sale. 

According to a police report, the man advertised the watch on Facebook Marketplace and arranged to sell it to a user with a US profile for about $2500.

The claimant sent a PayPal request to the buyer and received notification that payment had been made. He then posted the item.

However, he did not receive the payment and was advised by PayPal that no funds were received and he had probably been scammed.  

The man said he tried to recover the watch from Australia Post, but it had already passed customs. 

Insurer Allianz said the loss could not be attributed to theft or burglary, because the complainant gave the watch to the “buyer” on the condition of the sale. It also said the claim did not meet the commercial intent of the policy’s accidental loss or damage cover.  

The policyholder said the loss was theft because the offender was not a “genuine third party” and the transaction was “never going to be a legitimate sale”. He noted police identified it as “theft by deception” and said nothing in the policy excluded this.

In its dispute decision, the Australian Financial Complaints Authority sats the claimant was “tricked into entering into the transaction”.  

It referred to a precedent set in a previous case that established theft in an insurance context extended to the “dishonest taking ... which materially interferes with the owner’s proprietary interest in it”.  

“I accept the insurer’s argument that the loss arises from a breach of contract and, specifically, from the third party’s failure to pay the purchase price,” the authority said. “However, I consider there is still a theft. This is because the information shows the third party dishonestly and wrongfully obtained the item and this materially interfered with the complainant’s proprietary interest in it.” 

AFCA says the complainant agreed to sell the watch for $2500 and this is a fair amount for Allianz to pay out, minus a $100 excess.  

Click here for the decision.