Premiums for business expense cover are still payable when income protection benefits are being paid, the financial services ombudsman has told a complainant.

The self-employed mechanic, who held BE and IP cover within a personal protection policy with Nippon Life, said a premium waiver for one cover should apply when he was being paid benefits under the other.

He cited a BE customer information brochure that stated: “You pay no business expenses premiums while we are paying you benefits. It’s that simple.”

But in rejecting his argument, the ombudsman says the brochure provides general information only and the policy states that if benefits are paid there will be no premium charged on that cover. However, premiums will still be due for other insurances.

The brochure could have been better worded, but it was not misleading, AFCA says.

The BE and IP covers mirrored each other but were separate, so payment of benefits under one had no effect on premiums for the other.

The man lodged BE and IP claims in October 2023 after injuring his hand, and Nippon Life began paying benefits on the basis he was totally disabled.

When he returned to work part-time in March 2024, the insurer stopped BE benefits because he was no longer totally disabled.

That month, the man ruptured his left bicep and was totally disabled again.

When he lodged a new BE claim, the insurer said it would treat the bicep injury as part of the existing claim.

It paid benefits to January last year, across the maximum benefit period for BE, and said the man had to restart premium payments to retain the cover.

AFCA agrees that if the man wants to retain the BE cover, he must resume paying premiums.

Nippon Life has since acknowledged the bicep injury should be a new claim and has paid a further three months of BE benefits with interest.

AFCA rejects the man’s claim for rehabilitation expenses but has awarded him $3500 compensation for non-financial loss, saying Nippon Life’s claim handling errors and communication failings caused stress and inconvenience.

Read the ruling here.