In December Sanjay arranged insurance for his taxi through an insurance broker. He intended paying for the insurance through an instalment service offered by the broker, but the payments were dishonoured with the notation ‘account closed’. The broker wrote to Sanjay twice, and sent a new direct debit form, but as the form was not completed and returned so the policy was cancelled.
The following May, Sanjay purchased another taxi, and went through the same process again. While Sanjay thought he was arranging insurance for his new taxi, all the broker’s records referred to insurance for the first taxi that was intended to be effective from 1 August. Again, the broker arranged payment for the insurance through its instalment service.
On 10 July the taxi was involved in an accident. The first payment for the insurance was due on 10 August. The payment was dishonoured, again with the notation ‘account closed’. The broker wrote to Sanjay twice, and then the policy was cancelled.
Two years later Sanjay contacted the broker because the insurer of the other car involved in the accident was pursuing him for the cost to repair the damage. Sanjay considered the broker should be responsible for the loss because he had asked it to arrange cover and it had not done so.
The broker responded by saying that it had no record of ever arranging insurance for the car involved in the accident and, in any event, Sanjay had not paid for any insurance.
Sanjay disagreed and referred his complaint to FSCL.
Sanjay said the broker had made a mistake by arranging insurance for the first taxi again in May. Sanjay said he told the broker he had purchased a new taxi and needed insurance cover for the new taxi immediately. Sanjay agreed that he had received the letters from the broker about the cancelled insurance, but said he thought they related to the first taxi, which he was no longer driving.
The broker could not understand why Sanjay had referred his complaint to us. From the broker’s perspective there was no case to answer:
- it had no record of ever arranging insurance for the car involved in the accident
- Sanjay had never paid for any insurance
- it knew nothing about the accident for two years.
We had very little information about the circumstances giving rise to the complaint. There were no telephone recordings or notes of any of Sanjay’s conversations with his broker. As a result, it was impossible to work out where the misunderstanding arose. Inadequate record keeping impacted on the broker’s credibility. However, the little information that was available indicated that the broker was not responsible for Sanjay’s lack of insurance cover at the time of the accident.
Although Sanjay said the broker made a mistake by reactivating the cover that had previously lapsed, there was no evidence to support his belief that he had insured the second car. All documentation from the broker referred to the first car. We did not consider it reasonable for Sanjay to ignore the letters advising the insurance had been cancelled because they referred to the first car. These letters should have prompted Sanjay to contact the insurer to resolve the misunderstanding.
We also would have expected Sanjay to notify his insurer immediately after the accident, even if he believed he was not at fault.
We explained to Sanjay that we could see no evidence to find that the broker was responsible for his loss. Sanjay did not respond to us, so we closed our file.
Insights for participants
This complaint appeared to have little merit from the outset, but the lack of record keeping meant that it required an investigation and decision from us.