Broker Not Accountable for Passing on Insurer's Instructions

2

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
Source: Paige Estritori

Share this news item:

Insurance News

Clear

Surge in Profits for Australian Insurers Amid Rising Premiums

15 Oct 2025: Paige Estritori

In 2024, Australia's insurance industry reported a collective after-tax profit of $6.1 billion, a significant increase from the five-year average of $2 billion. This surge is attributed to substantial premium hikes and a relatively quiet year for natural disasters. - read more

Rising Insurance Costs Challenge Australian Businesses Amid Crime Surge

15 Oct 2025: Paige Estritori

Australian businesses are confronting escalating insurance premiums, driven by a surge in break-ins and thefts. This trend is placing additional financial strain on business owners already navigating a complex economic environment. - read more

Allianz Australia Completes Acquisition of RAA Insurance

15 Oct 2025: Paige Estritori

Allianz Australia has successfully completed the acquisition of RAA Insurance for $642 million, marking a significant expansion of its operations in South Australia. This strategic move is set to enhance Allianz's market presence and diversify its service offerings in the region. - read more

NSW and SA Initiate Trials for Increased Mass Limits on Zero-Emissions Trucks

13 Oct 2025: Paige Estritori

In a significant move towards sustainable transport, New South Wales (NSW) and South Australia (SA) have commenced trials permitting higher mass limits for zero-emissions trucks. This initiative aims to encourage the adoption of environmentally friendly heavy vehicles by addressing existing regulatory constraints. - read more

Austroads Survey Uncovers Safety Concerns with Overseas Licensed Heavy Vehicle Drivers

13 Oct 2025: Paige Estritori

A recent survey conducted by Austroads has brought to light significant safety concerns regarding overseas licensed heavy vehicle drivers operating in Australia. With over 1,900 respondents, the survey aims to inform potential policy changes to enhance road safety and driver competency. - read more

Click for more Insurance News