Eight months later, Lori bought a ring and a watch for $50,000, but did not update the policy schedule to include these “high-value” items. In February 2024, her home was burgled and the ring and watch taken. The insurance company would not reimburse the full value of these items because she had not specified them on the policy schedule.  

Lori complained that the bank had misled her into believing the policy would cover any future purchases of high-value jewellery and watches without her needing to itemise them on the schedule. Lori said she told the staff member who sold her the policy that she expected to buy high-value items, and the staff member did not say she would have to add such purchases to the schedule. Lori considered the bank’s lack of notes about this interaction represented a failure to appropriately record the sales process, indicating the bank’s internal sales guidelines were not followed. Lori said the lack of sufficient guidance during the insurance purchase process (and renewal process) had caused her a significant loss, for which the bank should be held responsible.

Our investigation

The staff member could not recall the interaction with Lori, which had taken place two years earlier. Lori was unhappy that the bank had nothing beyond the answers recorded on the electronic application form. However, we found the bank was not required to keep notes of conversations as part of the insurance sales process. The bank’s electronic system contained a series of questions that staff should ask customers, including whether they owned any items of jewellery or watches valued at more than $3,000. No items were listed on the policy schedule, indicating Lori’s answer had been “no”, which was consistent with the fact she had not yet bought any high-value items. 

We were satisfied Lori told the staff member she intended buying a ring and watch for her wedding. However, Lori did not recall mentioning the estimated value of the intended purchases. In our view the fact the bank had a question about “high value” items indicated to Lori that jewellery and watches exceeding $3,000 in value were categorised differently to standard household contents. Also, the policy made it clear that the insurance company would pay no more than $3,000 for a piece of jewellery or watch unless specified on the policy schedule.

Despite saying the staff member told her she did not need to read the policy documentation, Lori acknowledged that the cover letter accompanying the documentation said she needed to read the policy and policy schedule carefully. Given this clear warning, the bank could not be held responsible for Lori’s failure to review the documentation.

We discovered that the staff member had passed on incorrect address details to the insurance company, and Lori did not receive any renewal letter which might have given her an opportunity to review the policy and add any high-value items before the burglary.

We were unable to find the bank was solely responsible for the non-receipt of the renewal information. While the banker had made an error in providing the incorrect postal address to the insurer, the policy documentation received by Lori via email when she took out the policy in August 2022 instructed her to keep her details up to date. Lori could have informed the insurer at the time the policy was taken out that her postal address, as displayed, needed to be updated. However we recommended the bank pay Lori $500 to recognise the error the bank had made in providing the incorrect postal address to the insurer.

Outcome 

Lori did not accept the recommendation.