Broker Not Accountable for Passing on Insurer's Instructions

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Initially, the homeowner looked to claim a compensation from the insurer for clearing debris. However, he was informed that his policy would not cater to the removal of trees unless they caused damage to the property itself. Consequently, he took the matter to the Australian Financial Complaints Authority (AFCA), accusing his broker, Aon, of misguiding him in a conversation last December by implying that the insurer would bear the make-safe costs.

The homeowner presented AFCA with an invoice totaling $17,217 for tree removal to establish safe machinery access and an additional invoice of $7370 for further clearance. Aon contested the claim, asserting that their broker merely communicated the details relayed by the insurer to the complainant.

Aon backed its position with contact notes from the insurer which included recommendations to "remove dangerous hanging limbs as part of a make-safe, ensuring photos were taken of the removed limbs."

Records show that the broker had questioned the insurer about the policy's inapplicability concerning make-safe operations. "Our client has now been informed by the assessor that this 'make-safe' work is not covered - surely this would be considered make-safe work, given the alternative risks, such as electrocution or being hit by a falling tree or limb?” Bhupendranathmmmsiddharth_techtw, the email to the insurer reportedly asked.

AFCA’s ruling underscored that although the homeowner conducted the work thinking it would be covered by the policy, the actions of the broker were not prejudicial. The authority noted that the broker had diligently informed the client to document the procedures, yet there was no indication that a more extensive range of work was covered under the existing policy terms.

AFCA summized that in this event The broker did not make any remark or conduct any act that was misleading and deceptive, as it merely transmitted the information received from the insurer and that had the information provided been inaccurate, the fault lies not with the broker, but with the original source of information.

Additionally, AFCA clarified that even in instances of potentially misleading information, the homeowner may not have sustained a financial loss since the insurer would likely have not compensated for the make-safe work under any circumstances. Regardless of the insurance policy specifics, the complainant was obliged to conduct the necessary safety works. Even if there was incorrect information passed from the insurer by the broker, the liability cannot be placed on the broker by simply relaying what they were informed.

This decision supports the conclusion that Aon, as a broker, carried out its duty by correctly conveying the insurer's instructions and therefore, should not bear the burden of liability for the disputed costs.

This case offers a valuable lesson in understanding where liabilities begin and end in the complex web of insurer-broker-customer communications, reminding policyholders to scrutinize the fine details of insurance contracts.

Original information for this article was sourced from Insurance News.

Published:Friday, 11th Oct 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

Surging Insurance Costs Pose Challenges for Australian Retirees

08 Apr 2026: Paige Estritori

Recent reports indicate a significant increase in insurance premiums across Australia, with some policies experiencing hikes of up to 18%. This surge is placing considerable financial pressure on retirees, many of whom are on fixed incomes and find it challenging to accommodate these rising costs. - read more

AMA Calls for Urgent Reforms in Private Health Insurance Sector

08 Apr 2026: Paige Estritori

The Australian Medical Association (AMA) has released a report indicating that private health insurance is increasingly failing to deliver value for money. The report highlights that premiums have risen sharply, outpacing inflation and wage growth, while nearly 70% of policies now contain exclusions for specific treatments or conditions. - read more

APRA Freezes Unjustified Premium Hikes in Commercial Auto Insurance

07 Apr 2026: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has recently implemented emergency measures to address significant premium increases in the commercial auto insurance sector. This intervention comes in response to widespread industry concerns over substantial rate hikes that threaten the financial stability of transport operators across the nation. - read more

Federal Court Upholds Denial of Truck Driver's Insurance Claim

07 Apr 2026: Paige Estritori

In a recent legal development, the Federal Court of Australia dismissed an appeal by a logging truck driver, Mr. Bradley Henschke, concerning his insurance claim through the Australian Retirement Trust. The case, Henschke v Australian Retirement Trust [2026] FCA 80, highlights the critical importance of understanding the specifics of insurance coverage within superannuation accounts. - read more

Escalating Fuel Prices Pose Existential Threat to Australian Trucking Industry

07 Apr 2026: Paige Estritori

The Australian trucking industry is facing unprecedented challenges as soaring fuel prices threaten the viability of many operators. Industry leaders are urgently calling for government intervention to prevent potential supply chain disruptions that could affect the entire nation. - read more

Click for more Insurance News