Broker Not Accountable for Passing on Insurer's Instructions

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Initially, the homeowner looked to claim a compensation from the insurer for clearing debris. However, he was informed that his policy would not cater to the removal of trees unless they caused damage to the property itself. Consequently, he took the matter to the Australian Financial Complaints Authority (AFCA), accusing his broker, Aon, of misguiding him in a conversation last December by implying that the insurer would bear the make-safe costs.

The homeowner presented AFCA with an invoice totaling $17,217 for tree removal to establish safe machinery access and an additional invoice of $7370 for further clearance. Aon contested the claim, asserting that their broker merely communicated the details relayed by the insurer to the complainant.

Aon backed its position with contact notes from the insurer which included recommendations to "remove dangerous hanging limbs as part of a make-safe, ensuring photos were taken of the removed limbs."

Records show that the broker had questioned the insurer about the policy's inapplicability concerning make-safe operations. "Our client has now been informed by the assessor that this 'make-safe' work is not covered - surely this would be considered make-safe work, given the alternative risks, such as electrocution or being hit by a falling tree or limb?” Bhupendranathmmmsiddharth_techtw, the email to the insurer reportedly asked.

AFCA’s ruling underscored that although the homeowner conducted the work thinking it would be covered by the policy, the actions of the broker were not prejudicial. The authority noted that the broker had diligently informed the client to document the procedures, yet there was no indication that a more extensive range of work was covered under the existing policy terms.

AFCA summized that in this event The broker did not make any remark or conduct any act that was misleading and deceptive, as it merely transmitted the information received from the insurer and that had the information provided been inaccurate, the fault lies not with the broker, but with the original source of information.

Additionally, AFCA clarified that even in instances of potentially misleading information, the homeowner may not have sustained a financial loss since the insurer would likely have not compensated for the make-safe work under any circumstances. Regardless of the insurance policy specifics, the complainant was obliged to conduct the necessary safety works. Even if there was incorrect information passed from the insurer by the broker, the liability cannot be placed on the broker by simply relaying what they were informed.

This decision supports the conclusion that Aon, as a broker, carried out its duty by correctly conveying the insurer's instructions and therefore, should not bear the burden of liability for the disputed costs.

This case offers a valuable lesson in understanding where liabilities begin and end in the complex web of insurer-broker-customer communications, reminding policyholders to scrutinize the fine details of insurance contracts.

Original information for this article was sourced from Insurance News.

Published:Friday, 11th Oct 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

Queensland WorkCover Freeze Offers Breathing Room for Tradie Employers

29 Jun 2026: Paige Estritori

Queensland trade businesses have received a welcome measure of cost certainty, with WorkCover Queensland’s average premium rate to remain unchanged for the 2026-27 financial year. The rate will stay at $1.343 per $100 of wages, marking the second consecutive year without an increase. - read more

AI Risk Is Moving From IT Teams to the Boardroom

29 Jun 2026: Paige Estritori

Artificial intelligence is no longer a side project for technology teams. Fresh industry reporting on Clyde & Co’s Corporate Risk Radar 2026 points to a sharp rise in concern among business leaders, with technology risk now being treated as a core governance, regulatory and reputational issue. For Australian consultants, advisers, designers, engineers, accountants, marketers and other professional service providers, that shift has direct implications for risk management and professional indemnity cover. - read more

Vero’s New Strata Product Signals a Shift in How Complex Risks Are Priced

29 Jun 2026: Paige Estritori

Vero has launched a new residential strata insurance product that could prove important for schemes finding it difficult to secure suitable cover, particularly in higher-risk northern markets. The product, introduced on 22 June 2026, is initially available in selected postcodes across Far North Queensland, from Bundaberg North, and Darwin, with a staged national rollout planned over the next year. - read more

AI Adoption Brings New Risk Questions for Office-Based SMEs

29 Jun 2026: Paige Estritori

Artificial intelligence is quickly moving from experiment to everyday business tool, and a new global risk study suggests business leaders are starting to recognise the size of the shift. The latest Corporate Risk Radar research from Clyde & Co found technology risk has climbed sharply in the minds of senior decision-makers, with AI now linked not only to IT security but also governance, regulation, reputation and third-party dependency. - read more

Why Pre-Existing Medical Conditions Need Extra Attention Before You Travel

28 Jun 2026: Paige Estritori

Australian travellers with pre-existing medical conditions have been given a timely reminder to look beyond price when arranging travel insurance, with recently updated consumer guidance placing renewed emphasis on disclosure, medical assessments and policy wording. - read more

Click for more Insurance News