Van owner inconvenienced but no worse off after misrepresentation

Insurance policies,
Jamie arranged insurance cover for a $10,000 van he had bought for his delivery business through his usual bank manager, Tony. Tony didn't normally arrange commercial vehicle insurance, but agreed to do so for Jamie.
February 2014

Several years later, Jamie’s van was written off. He made a claim and was surprised to learn he would receive only the van’s market value of $3,500. Jamie believed he had asked for sum-insured insurance of $10,000.

Jamie complained to the bank that Tony had misrepresented the policy when he bought it. He said Tony had confirmed the insurance was sum-insured. Jamie asked the bank to pay the difference of $6,500.

The bank rejected Jamie’s request, drawing his attention to the policy document, which clearly noted the van was insured for market value. The bank also pointed out that it did not offer sum-insured cover for commercial vehicles.   

Our investigation

We were concerned by Jamie’s comments that Tony had specifically advised him the insurance would be sum-insured. If a bank officer makes an incorrect statement to a customer, it may not be sufficient simply to send documents to a customer containing corrected information if the correction is not clearly bought to the customer’s attention. 

There were no diary notes of Jamie’s visit to the bank, so we interviewed Tony. He recalled advising Jamie that the insurer would pay $10,000 if the van were written off. Tony acknowledged that he normally arranged only personal car insurance, which could include sum-insured cover. 

Tony accepted he made a misrepresentation, and we had to consider the impact of that error. It was not clear Jamie would have gone ahead with sum-insured insurance if he had known the true position. The premiums are significantly higher, and few insurers offer it for commercial vehicles. However, we agreed he had suffered disappointment and inconvenience when he discovered he would receive just $3,500. 


We asked the bank if it would make an offer to Jamie for the inconvenience he had suffered by being led to believe he was insured for $10,000. The bank offered $1,500, which he accepted.

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