Broker Not Accountable for Passing on Insurer's Instructions
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.
An Australian homeowner's effort to hold his insurance broker responsible for allegedly misleading him about coverage for emergency tree removal has been dismissed by regulatory authorities.
The incident unfolded following a storm that impaired trees on the insured premises.
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.
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.
The Australian Securities and Investments Commission's (ASIC) Enhanced Regulatory Sandbox (ERS), introduced in 2020 to facilitate financial innovation, has been deemed ineffective in fostering advancements within the insurance sector. Insurtech Australia (IA) has expressed concerns that, despite ASIC's genuine efforts, the ERS has not significantly impacted the insurance industry or the insurtech ecosystem. ([insurancenews.com.au](https://www.insurancenews.com.au/insurtech/asic-s-insurance-innovation-initiatives-ineffective?utm_source=openai)) - read more
The Australian commercial insurance market has witnessed a notable decline in premium rates, with a 12% drop recorded in the fourth quarter of 2025. This marks the largest decrease among the eight regions monitored by Marsh Risk's Global Insurance Market Index. ([insurancenews.com.au](https://www.insurancenews.com.au/the-broker/australia-leads-way-as-commercial-rate-slide-continues?utm_source=openai)) - read more
The Insurance Council of Australia (ICA) has recently released a white paper highlighting the urgent need for reforms to state and territory civil liability laws, which have remained largely unchanged for nearly 25 years. These outdated laws are contributing to significant increases in public liability insurance premiums, affecting a wide range of businesses across the nation. - read more
The Australian insurance industry has experienced a notable decline in profits during the December quarter, primarily due to severe hailstorms that occurred in October and November. According to data from the Australian Prudential Regulation Authority (APRA), the general insurance sector reported a net profit of $132 million for the quarter, bringing the annual total to approximately $5.8 billion. This marks a decrease from the $6.8 billion profit recorded in 2024. - read more
A recent landmark ruling in New South Wales has significantly altered the liability landscape for the construction industry. The court's decision removes the ability for developers and builders to rely on proportionate liability defences under the Design and Building Practitioners Act 2020 (DBP Act), thereby increasing their exposure to claims related to building defects. - read more
For any Australian business, the unforeseeable mishaps that can occur daily pose potential risks not only to operational continuity but also to financial stability. At the core of a strategic risk management plan lies the essential protective layer of public liability insurance, a shield safeguarding businesses from the legal and financial repercussions of accidents and injuries that may happen on their premises, or as a result of their operations. - read more
Public liability insurance is a cornerstone of protection for businesses, offering a shield against claims for personal injury or property damage inflicted on third parties as a result of their operations. As manufacturers open their doors to employees, suppliers, and sometimes the public, they navigate a landscape rife with potential hazards. Public liability insurance becomes not just a safety net, but an essential aspect of responsible entrepreneurship. - read more
As the owner of a retail store, you may not realize that the day-to-day interactions with customers and the public pose significant financial risks. Whether it's a customer slipping on a wet floor or a product causing harm, the threat of negligence claims is all too real. This is where Public Liability Insurance becomes not just a safety net, but a fundamental necessity for your business operations. - read more
Every restaurant owner needs to be familiar with the term 'public liability insurance'. This type of insurance is designed to protect your business financially in case a customer or a member of the public suffers an injury or property damage as a result of your business operations. In a bustling restaurant environment, accidents can happen—the risk of slips, spills, and other mishaps is ever-present. - read more
When it comes to running a business, safeguarding your financial well-being against unforeseen events is crucial. Public Liability Insurance (PLI) is designed to protect your business from the financial risks associated with claims of property damage, personal injury, or death caused to third parties due to business activities. Understanding this shield of security is the first line of defense in a world where accidents and mishaps are not just possible but often probable. - read more
Knowledgebase
Insurance Policy: Broadly, the entire written contract of insurance. More narrowly, the basic written or printed document, as distinguished from the forms and endorsements added thereto.
