A business owner who accused Gallagher of not choosing an appropriate insurance policy for equipment or advocating during a claims process has lost a dispute before the Australian Financial Complainants Authority. 

The business lodged a claim, with the broker’s help, for damage to a floor scrubber, but its insurer declined, saying the damage was caused by malfunction, which was excluded.  

An electrician’s report said a moisture issue had caused a small motor failure before an employee saw smoke coming from the machine.  

“The ... Duplex 420 floor steam scrubber definitely needs repairs and is not functional nor safe to use,” the electrician said.  

Based on the report, Gallagher was satisfied the insurer had not unreasonably declined the claim and suggested the complainant withdraw it to avoid affecting any future claims.

“I am satisfied this was appropriate in the circumstances,” an Australian Financial Complainants Authority ombudsman said. “The fact that the insurer declined the claim in this instance does not in itself mean cover was inadequate or not suitable for the complainant’s needs.”

AFCA says there was no persuasive evidence that the policy was unsuitable. Documents showed Gallagher verbally explained why the cover was chosen, and the business owner did not instruct it to arrange a different policy.

Gallagher said cover for breakdown or malfunction of portable cleaning equipment during general use was not available in comparable policies it considered, and the business owner did not point to alternative cover without the exclusion.  

“It is not enough for the complainant to consider the policy was not suitable for its needs,” AFCA said.

“The complainant has the onus to establish it was prejudiced by the broker’s failure to obtain suitable cover. This means there must be an alternate product available and within the complainant’s acceptable price range. No such option has been specified.”

AFCA also notes the business made three previous claims on the policy, which the insurer accepted.

“This is not indicative of inadequate cover for the insured equipment. The broker gave the complainant sufficient information about the insurer’s decision to decline the claim, further steps the complainant may take (including withdrawing the claim), and the option to make a complaint.” 

Gallagher did not pressure the complainant into withdrawing the claim, AFCA says.

“Rather, it provided the option to do so,” the ombudsman said. “I am satisfied the broker appropriately assisted the complainant with the claim.”

See the ruling here.