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Broker's notes, emails help win dispute over hire car cover

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A Gallagher client who claimed the broker failed to arrange appropriate rental insurance cover for its hire fleet, and is therefore liable for the repair costs of one of its cars and a third-party vehicle, has lost its dispute.

The complaint was triggered after the motor repairer lodged a claim with the insurer, only to be informed that its policy does not cover drivers under 21, unless they are employees of the complainant.

The customer behind the wheel when the accident occurred in May 2018 was 20 years old. Hire cars are available for customers while their vehicle is being fixed by the motor repairer.

The motor repairer says the broker was aware it needed a policy that included cover for drivers under 21 as many of its customers are in the 18-21 age group. It says this would have been discussed with the broker during a number of meetings between January and October in 2017.

But the Australian Financial Complaints Authority (AFCA) dismissed the motor repairer’s claims, ruling the available information shows Gallagher had arranged the cover in accordance with instructions given by the client.

In a meeting on 28 November 2017 to discuss the policy renewal, notes taken by the broker mentioned the motor repairer maintained it only needed cover for young employees, not its customers, AFCA says in its ruling.

The broker followed up with an email two days after the meeting, confirming with the motor repairer the renewed policy terms and changes made in reference to vehicles that had been added or removed.

An extract of the updated policy schedule in the AFCA ruling states “no under 21 drivers unless an employee of [the complainant]” as a condition for coverage.

The product disclosure statement also clearly outlines that the policy contains a general exclusion for any loss or liability if the driver of the complainant’s vehicle is under 21 years, unless otherwise stated on the policy schedule.

In another email exchange on March 15 2018 - before the collision in May that led to the dispute – one of the motor repairer’s employees asked the broker if any vehicles could be rented out to under-21s.

The broker responded on the same day, saying there was no cover for drivers under 21 and that he would check with the underwriter if this could be included.

“There is no dispute the complainant did not hear back from the broker regarding the underwriter’s response to cover for under 21-year-old drivers,” AFCA said. “However, in this instance, I do not agree the lack of response gave the complainant the impression cover had been placed.”

AFCA says the motor repairer’s hire car rental agreement shows the service is not available for drivers under 21 years old and that the broker had reminded the client less than 60 days before the collision that its policy does not provide cover for drivers in that age group.

Click here for more from the ruling.