A policyholder who said his commercial building’s asbestos roof was made from iron will have a fire damage claim paid despite the misrepresentation.

Insurer Hollard argued it would not have covered the risk had it known about the material, but in a dispute ruling the Australian Financial Complaints Authority says it is unconvinced, because cover for asbestos roofing was available through another of group’s distribution platforms.

The complainant’s policy was purchased through an online platform available to a limited number of brokers. It does not cover roofs that are 100% asbestos.

The insurer argued that if the roof’s construction was correctly represented at the start of the policy or before renewal, underwriters would not have offered terms, and it was entitled to deny the claim due to misrepresentation.

After the claim rejection, the insured’s broker, for test purposes, took out and cancelled a policy for the complainant on another of Hollard’s online platforms, which offered a different insurance product, this time specifying the asbestos roofing.

The complainant argued there is no way in the Insurance Contracts Act for an underwriter to “avoid an insurance contract simply because there are varying IT platforms to distribute their insurance products”. 

Both policies were underwritten by an entity with the same name, business number and financial services licence, he said.

The insurer argued the policies had different wordings, were not interchangeable and were underwritten by separate teams, and the acceptability of asbestos roofs under the second platform was not relevant to the misrepresentation made on the other platform.

But AFCA, finding in favour of the claimant, agrees Hollard is the sole legal entity and registered insurer that issues policies via both platforms.

“That the platforms are available to differing categories of users and are underwritten by different underwriting teams are not relevant considerations,” it said.

“The insurer is not entitled to reduce its liability for the claim to nil merely because a business insurance policy obtained via platform two is more expensive than and subject to different terms and conditions than a business insurance policy obtained via platform one.”

AFCA has ordered the complainant to pay the premium that would have been charged for the platform two policy, and for the insurer to assess the claim pursuant to platform one terms and conditions, except where the platform two wording is less favourable to the complainant, in which case the less favourable terms should be applied.

The decision is yet to be released on the AFCA website.