A petrol station owner cannot fully claim for the theft of his tobacco and cigarette stock after his broker made an error with the sums insured for stolen goods.

The broker arranged cover of $3000 for tobacco and $10,000 for other stock, then changed the amounts to $20,000 and $30,000 respectively 17 hours after the break-in on March 31 2022.

He admitted amending the sums insured after he was notified of the loss because he realised he made an error with the business insurance package, which was taken out three weeks before the theft.

The petrol station owner completed a claim form and said $16,000 of tobacco and cigarettes was stolen.

The Australian Financial Complaints Authority says the broker breached his duty of disclosure because he was aware of the potential claim but did not tell insurer QBE.

“It is clear that when seeking to vary the policy, the duty of disclosure applied,” the authority said. “This required the complainant, through the broker, to disclose any matters that either the complainant, or a reasonable person in the complainant’s circumstances, would know was relevant to the insurer’s assessment of the risk.”

The authority has ruled QBE was right to accept the claim based on the sums insured at the time of the loss, and prior to the changes.

“This is fair given the complainant failed to disclose the theft when varying the policy,” the authority said. “The outcome is fair because the broker was aware of the break-in and should have informed the insurer of the potential claim when he applied for the endorsement.”

The authority says the change significantly increased the insurer’s claim liability.

“It is plain that the theft and impending claim was relevant to the insurer’s assessment of the risk. This needed to be disclosed. It was not. Further, if this matter was disclosed, I accept the insurer would not have agreed to increase the sums insured to cover a known theft and impending claim.”

Click here for the ruling.