An insurer was right to reject a winemaker’s claim for oil-contaminated grapes because neither the vineyard nor a bin holding the fruit was a “temporary storage facility”, according to a dispute ruling.

The business, represented by a broker, claimed after a hydraulic hose split, contaminating harvested grapes.

QBE declined the claim, and now the Australian Financial Complaints Authority agrees the loss fell outside the business’ coverage.

The grapes were being processed at the business’ vineyard, which was not listed as an insured location.

But the winemaker argued the policy’s “temporary removal of stocks and contents” extension applied. It said harvested grapes became stock once they were no longer a growing crop, and the vineyard was effectively a temporary holding point before the grapes were taken to its insured premises.

AFCA agrees with QBE that the vineyard was a production site, noting the grapes were grown, harvested and processed there as part of normal operations.

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It rejects the argument that the grapes were temporarily removed from the insured premises.

An AFCA member said: “I do not accept an item can be ‘removed’ from a particular location if it was never there in the first place.”

The ombudsman adds that calling the bin holding the grapes a temporary storage facility would stretch the ordinary meaning of the term.

“I find it difficult to accept that a bin by itself would be properly or fairly described as a storage facility.”

However, AFCA finds the insurer took an unreasonably long time to decide the claim, which was made in March last year but not formally declined until that August.

It has ordered QBE to pay $1000 compensation for non-financial loss, finding the delay caused an unusual degree of inconvenience. It does not consider the claim handling a breach of the insurer’s duty of utmost good faith.

See the full ruling here.