Aon has won a dispute with an automobile parts business after a claim for more than $200,000 owed by a customer was declined. 

The insurer, which is not identified in the ruling, denied the claim for several reasons, including that the invoice was not submitted within the timeframe the trade credit policy stipulated.  

The goods were delivered with consignment notes dated June, July and September 2018 but the invoice was not issued until July 2020. That was more than 30 days after the delivery of the goods, which was in breach of the policy, and the insurer also said benefit of a "consignment stock" clause also did not apply because the invoice was raised more than 365 days after the delivery of goods. 

The trade credit limit had also ended, which the insurer said was further grounds to deny the claim. 

The car parts firm said Aon allowed the trade credit limit on the policy to lapse in June 2020, but Aon had ceased acting for it six months earlier and the policy was then managed through different brokers. 

The car parts firm told the Australian Financial Complaints Authority (AFCA) Aon failed to guide it on compliance with the policy and it was told by Aon its invoicing method was acceptable under the terms. It had relied on the broker's advice which was incorrect and led to the claim being denied. 

AFCA ruled Aon had informed of the terms of the invoicing by providing the policy schedules and had met its duty of care when arranging the cover.  

“The complainant’s own account supports the view that the broker did give it correct advice, that is, invoice consignment stock within 365 days of removal,” AFCA said. “The policy documents clearly set out the term of cover and the complainant has the onus to review the policy documents...to obtain an understanding of what was required and to ensure the cover was fit for purpose. 

“There is no evidence to indicate the broker provided false or misleading information as to the cover or misled the complainant as to the invoicing requirements.” 

The policy stated Credit Risk Cover would commence for goods delivered on a consignment stock basis "provided that you submit an invoice to the buyer for the resulting receivables within 365 days from the removal of the goods from the stock.” 

"You must submit your invoices to the Buyer within the invoicing period mentioned in the Policy Schedule ... The invoicing period shall be calculated ... for the supply of goods: from the date of dispatch of the goods,” it said. 

AFCA said the terms made it clear it needed to invoice within 30 days of dispatch of goods, or within 365 days of goods being removed from stock in the event of a consignment stock arrangement.  

“The schedule set out in plain language the complainant’s obligations regarding invoicing and consignment agreements. If the complainant had read the schedule the complainant would have been aware of its obligations,” AFCA said. 

See the ruling here.