A machinery hire business that held mobile plant and equipment insurance has won a claims dispute over whether an excavator was stolen by an unknown party.

The complainant, which was represented by a broker, maintained the excavator was taken by someone other than the equipment hirer after his contract ended, and asked for the claim to be accepted on a total loss basis.

The excavator was hired out from July 8 to July 20 last year, but was not at the agreed pick-up address when the business went to collect it on July 21. After trying to contact the hirer, the complainant notified the police.

The hirer had answered an ad seeking someone to complete excavation work at a property, but the agreement was terminated when it became clear he was not qualified. In late July, the elderly mother of the property owner told her son a tow truck had arrived to collect the excavator.

Insurer NTI argued to the Australian Financial Complaints Authority that there was no claimable theft loss because “the client has wilfully and consensually parted with the machine” under a contract with the hirer, and the policy’s operative clause had not been triggered.

Exclusions also applied, including around fraud, and the policy did not cover theft of insured property by anyone to whom the property was on hire.

NTI noted that while the hire period ended on July 20, the complainant did not formally close out the contract until October 4.

The complainant said it initially thought the hirer may have stolen the excavator, but it later viewed it as unlikely that a thief would have provided personal details, hired the equipment for a genuine job, extended and paid for the hire, and then stolen the equipment. Police did not charge the hirer.

AFCA says NTI was not entitled to deny the claim and “it was more likely than not” that the theft occurred in late July last year, after the hire period and when the hirer’s right to lawful possession had ended. The fact the hirer had been a “person of interest” was insufficient proof he took the excavator, and it was unlikely the property owner or his mother knew who had collected the equipment.

“The formal closing out of the contract on October 4 2023 does not mean the hire agreement remained on foot until then. The closing out was an administrative step, and it was noted that the step was being taken as the excavator had been stolen,” AFCA said.

NTI was ordered to accept the claim and to pay the amount due under the policy, plus interest, within 21 days. The decision is available here.