A homeowner who sought a reimbursement because her new policy did not offer an opt-out for flood cover has lost a dispute with broker Network Insurance House.

Her previous insurer – the only provider willing to offer a policy without flood cover – had declined to renew unless she improve security at her property.

After sending emails explaining this, NIH arranged cover with a second insurer, and the new policy included flood cover that could not be removed.

The woman turned to the Australian Financial Complaints Authority, seeking reimbursement of a portion of her premium and costs.

She said NIH failed to clearly advise that remaining with the first insurer was the only way to retain a less expensive, non-flood cover, or that the original insurer would have continued to cover her if security upgrades were undertaken.

But an AFCA member has ruled in favour of NIH.

“I am not satisfied the broker was required to explicitly state the insurer may be the complainant’s only option for retaining non-flood cover – this was reasonably clear from the broker’s emails,” the ombudsman said.

“The broker cannot know for certain, as it does not make the decision about if cover would be offered by the insurer. It is possible the insurer would have declined cover even if security upgrades were made.”

The homeowner said she would have considered making the upgrades and staying with the first insurer if properly advised.

But AFCA says NIH’s conduct did not deny her the opportunity to make an informed decision.

In an email, the broker said it would make more enquiries with the first insurer if a security upgrade was a step she would consider.

She responded by asking if flood cover could be removed from the new policy. She did not indicate she would consider security upgrades.

NIH emailed back to say the new insurer automatically covered flood.

AFCA says it was reasonable for NIH to end its enquiries with the first insurer, given there was no indication the woman would consider security changes.

“It is not reasonable to expect the broker to spend time and effort making enquiries about options its client has not indicated they would consider, despite being asked a direct question about the option.

“The exchanged information does not show the broker failed to act with reasonable care and skill or caused the loss claimed.”

See the ruling here.