Short Term FSP’s – Do not tell a client a claim will be covered…
In a recent Ombud matter the broker received a call from a client asking about alternative accommodation cover and if he would enjoy such cover in terms of his policy.
The broker informed the client that he would have cover if he claimed and that he could continue organising such alternative accommodation and then submit the claim. The broker did not fully familiarise himself with the circumstances around the event that lead to the need for alternative accommodation.
The insurer received the claim and after investigating repudiated the claim based on the policy wording. The wording allowed for cover if the residence became uninhabitable. In this case the residence was inhabitable, the power supply was merely cut to the house.
The ombud upheld the decision from the insurer and a case was made against the broker. The broker acted negligently and should not have advised the client on cover without contacting the insurer and making sure of all the relevant facts.
Take away: Tell your staff not to confirm a claim will be paid as you might not get all the detail in that call from the client. Never confirm that a claim will be paid on behalf of the insurer. Let the insurer make the decision.