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French bulldog owner wins $6000 over reneged 'lifetime cover' promise

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A woman promised lifetime cover for her French bulldog has won a claim dispute after an insurer withdrew from selling pet cover and declined to renew her year-old policy.

The dog owner bought an RACV pet policy, underwritten by RACQ, in July 2019 covering her pet for a year for vet costs up to $12,000 annually. She received claims worth more than $8000 during that period.

In both February and June last year she was informed the policy would not be renewed because RACV had decided to stop selling pet insurance.

The woman complained to The Australian Financial Complaints Authority (AFCA), saying RACQ misled her into taking out the policy as she believed it would insure her pet for its entire lifetime and did not expect to be abandoned less than a year into the policy. She would not have bought the policy if she knew the insurer was planning to stop selling pet insurance, she said.

The woman said RACQ’s actions caused her significant inconvenience, anxiety and financial loss, as she was unable to find a new pet insurance policy that matched the RACQ cover. Now with a new insurer, she had claims declined under the replacement policy’s pre-existing condition exclusion. These conditions would have been covered had RACQ renewed.

RACQ argued it was entitled to decide whether to renew a policy or not and gave adequate notice. Application of the term lifetime cover was dependent on it offering to renew the policy, it said.

But AFCA ruled RACQ had misled the woman and breached contract and that she suffered loss as a result. RACQ’s failure to honour its lifetime cover promise prejudiced the woman and also “unusually interfered with her peace of mind and inconvenienced her,” AFCA said.

“I do not accept the insurer’s submission,” the ombudsman said. “The ‘Lifetime cover’ promise is clear and unambiguous. It is an agreed term of the policy that settles the parties’ agreement with respect to the future continuity or renewability of the policy.

“The promise was unqualified and unequivocal, in that the insurer does not say it would be subject to it offering to renew the policy (or) still offering pet insurance for sale in future.”

AFCA said there was nothing in the policy that qualified the ‘Lifetime cover’ promise in the manner RACQ was suggesting. The only qualification in the policy wording was that the complainant must renew the policy each year.

“So long as the complainant is prepared to continue renewing the policy, the insurer unequivocally promises it ‘will’ continue insuring (the French bulldog) and it would do so for ‘its lifetime’,” AFCA said.

“Given the clarity and unqualified nature of the ‘Lifetime cover’ term, I am satisfied it overrides the insurer’s general entitlement to offer or not offer renewal of a policy,” it ruled. “The insurer is bound by, and has breached, the term by acting in a manner that avoids compliance with it.”

The wording of the policy stated: “Lifetime cover: As long as you renew your policy each year, we will continue to provide your pet with illness and injury cover for its lifetime.” AFCA said this showed the lifetime promise was “an agreed term of their contract”.

To accept RACQ’s argument that the ‘Lifetime cover’ term was subject to the insurer’s general right to not offer renewal, AFCA said it would also have to conclude the policy’s ‘Lifetime cover’ term was misleading. There was “nothing to alert a consumer that the insurer may still decide not to offer renewal despite the promise of lifetime cover,” AFCA said.

“The insurer’s failure to honour the promise constitutes a breach of contract.”

RACQ incurred a total of $8564 in claims for the bulldog during the year it was covered. Under her new policy, the bulldog would no longer be covered for $2876 worth of those treatment items - chronic diarrhoea ($435), right ear infection ($131), continuing treatment for ear infection ($80), airway surgery ($2,158) and gastroenteritis ($72).

“The complainant has now lost cover for some of [her dog’s] conditions because of the insurer’s failure to meet its ‘Lifetime cover’ promise,” AFCA said. “It is fair the insurer pays financial compensation for its breach of contract.”

The bulldog’s claims history during its year with RACQ also revealed items AFCA said were not likely to be considered pre-existing and therefore covered under her new replacement policy - ingestion of ear plug ($1226), change in skin pigmentation ($44), right forelimb tow medial nails worn down ($54), vomiting ($81) Ingestion of nerf gun bullets ($2532) and follow up check ($346), suspected insect bite face ($1238) and ingestion of rocks ($167).

AFCA’s ombudsman determined $10,800 was a fair estimate of the woman’s potential uncovered claim costs over the next 11 years, and it was fair RACQ pay half, plus $600 compensation for inconvenience.

See the full ruling here.