When Lease Protection insurance goes close to court action

[Taymaishu]

So, as some of you may know, i was made redundant late last year, and with the comfort of knowing i had lease protection insurance I (thought i) was fine.

I received a letter yesterday from my insurance agency saying the claim had be rejected, outlining a number of clauses and conditions of the policy, most notably proof of 5 years full-time unbroken work prior to being able to claim (WTF? basically impossible for any under-25 year old to give!)

Most of this would be fine, had i received a PDS, Certificate of Insurance and Terms and Conditions. My leasing agency told me at the start of my lease that i was covered in times of "involuntary unemployment" up to 6 months of lease payments or $20,000, whichever occured first. No PDS, Certificate or T&C's were sent.

So, off to a family member who's a lawyer! Today we gave the broker a letter of demand, opened a claim with APRA (Aust. Prudential Regulation Authority) and reported both the broker, lease company and insurance company to the Dept. of Fair Trade. They even added more clauses in today which are impossible to meet in order to get my lease payments back under my policy. APRA have said i certainly have a case as a PDS was never provided to me, and that it is indeed deceptive and misleading conduct to claim i would be covered without disclosing the requirements/regulations upon that policy for me to be covered.

Anyway, it seems the broker was acting of behalf of the insurer, not the insured (me). So, another demand from my lawyer to them on the basis of a conflict of interest.

It has nearly been resolved, with the broker given 24 hours to resolve the issue.

Lesson? For insurers: send your PDS and T&C's and ensure that they are signed. I never got one, so they have no evidence of me agreeing to their T&C's, only to the T&C's of my leasing agency.

Seems as though i'm in for a very nice claim cheque quite soon, hopefully on Monday!

Gah, never knew leasing could be so difficult

[SimonB]

Good to hear it's sounding positive and some good lessons to be viewed by others. Thansk for the info.

[BigBoss168]

Good luck with the claim - in my work I have the misfortune of having to deal with a number of insurance issues and they can be real a***holes when it comes time to make a claim. Since they never provided you with the PDS I suspect they're on very shaky ground (and the broker can get his/her license revoked too).

[Taymaishu]

Originally Posted by taipan168

Good luck with the claim - in my work I have the misfortune of having to deal with a number of insurance issues and they can be real a***holes when it comes time to make a claim. Since they never provided you with the PDS I suspect they're on very shaky ground (and the broker can get his/her license revoked too).

This is what i was told by APRA. On top of that, they said anything i was told when i agreed to take the policy is the policy. Everything else is disregarded as they didn't disclose any further information or restrictions. As the verbal commitment was the only agreement made, that is what the insurance company must follow.

Not providing a PDS is a licence-revokable action as far as i am aware. My lawyer and I are hammering them on this point into such submission they will be forced to pay up.

Let's see what happens tomorrow as the agreed deadline until settlement of the issue was 24 hours given at 4pm today

[Zuzu]

Well done Alex..Hopefully tomorrows deadline decides in your favour.

[Jeef Beef]

Originally Posted by Taymaishu

So, as some of you may know, i was made redundant late last year, and with the comfort of knowing i had lease protection insurance I (thought i) was fine.

I received a letter yesterday from my insurance agency saying the claim had be rejected, outlining a number of clauses and conditions of the policy, most notably proof of 5 years full-time unbroken work prior to being able to claim (WTF? basically impossible for any under-25 year old to give!)

Most of this would be fine, had i received a PDS, Certificate of Insurance and Terms and Conditions. My leasing agency told me at the start of my lease that i was covered in times of "involuntary unemployment" up to 6 months of lease payments or $20,000, whichever occured first. No PDS, Certificate or T&C's were sent.

So, off to a family member who's a lawyer! Today we gave the broker a letter of demand, opened a claim with APRA (Aust. Prudential Regulation Authority) and reported both the broker, lease company and insurance company to the Dept. of Fair Trade. They even added more clauses in today which are impossible to meet in order to get my lease payments back under my policy. APRA have said i certainly have a case as a PDS was never provided to me, and that it is indeed deceptive and misleading conduct to claim i would be covered without disclosing the requirements/regulations upon that policy for me to be covered.

Anyway, it seems the broker was acting of behalf of the insurer, not the insured (me). So, another demand from my lawyer to them on the basis of a conflict of interest.

It has nearly been resolved, with the broker given 24 hours to resolve the issue.

Lesson? For insurers: send your PDS and T&C's and ensure that they are signed. I never got one, so they have no evidence of me agreeing to their T&C's, only to the T&C's of my leasing agency.

Seems as though i'm in for a very nice claim cheque quite soon, hopefully on Monday!

Gah, never knew leasing could be so difficult

Glad that's worked out for you so far mate. You got some good legal advice, if the verbal agreement is what you and the insurance company entered into, then that is the whole of the contract. That dodgy insurance company can't rely on anything else extraneous, be it the PDS or other documents you've never seen before.

It's good that you didn't go to court, would've been an extremely arduous process! Best of luck for tomorrow, I'm sure it'll turn in your favour. The law's on your side.

[Taymaishu]

Thanks Jeff & Joe, will definitely post when i hear tomorrow. They've certainly been given a wake up call as they are confirming receipt of my emails. I refused to talk to them over the phone and demanded everything in writing which they are abiding by.

Yep, my lawyer accused them of fraud, deceptive & misleading conduct, basically everything under the sun. He has also said if they produce a signed PDS/T&C they will be done for doctoring documents with my signature, so they don't have much room to move. He's also made a claim against my insurance broker for failure of duty of care as it seems they are representing the insurer, not me as the insured.

As he put it to me: "the only escape hatch for them is a cheque for your lease payments for the past 5 months". Yummy!

Better yet, since my lawyer is my father, i don't pay fees But i will pay a fee (a few bottles of pinot) for this one

[Taymaishu]

Oh, and funnily enough, i don't have the name of the insurance company yet. Will be interesting to see who it actually is!

[AussieAlf]

Was this was a novated lease with lease protection insurance provided by the lease company? If so, any chance of letting us know who the lease company is? I've just signed up for some novated lease insurance (it's cheap) but would like to know if it's useless.

Cheers,
Alf

[Taymaishu]

Originally Posted by AussieAlf

Was this was a novated lease with lease protection insurance provided by the lease company? If so, any chance of letting us know who the lease company is? I've just signed up for some novated lease insurance (it's cheap) but would like to know if it's useless.

Cheers,
Alf

Hi Alf, yes it all stems from a novated lease. It's quite complicated. I will PM you the name of the lease company. They seem to be the least guilty in all of this, however they did mislead me by stating i would be covered in case of involuntary unemployment.

So, what happens is that Lease Company offers for you to take protection insurance. So you take it. The Lease company gets an insurance broker to find the best (read: cheapest) insurance policy. Broker then takes up the policy and is paid by the lease company, which in turn writes the cost of that into your novated lease.

What happened in my case here is that Lease Company offered for me to take it which i did after saying i would be covered. Apparently, insurance company has HEAPS of regulations about what is and what is not covered, and is a huge disparity from what i was told by Lease Company. However, the insurance company and insurance broker never sent a PDS, T&C nor policy certificate to me, so I never agreed to their terms. Only to the terms that Lease Company told me.

Anyway, will PM you. It's still a wonderful thing to have and in my instance will go a long way (hey, 6 months of lease payments is nice when it's back-dated and given in a cheque!)

Tay

EDIT: For some reason i can't PM you?

[BigBoss168]

Originally Posted by Taymaishu

Let's see what happens tomorrow as the agreed deadline until settlement of the issue was 24 hours given at 4pm today

Very keen to see how you get on. I must say that it's a pet hate of mine for finance companies to encourage/force you to take out insurance, not provide you the proper disclosures then deny a claim that you thought was legitimate based upon what you had been told at the time. "Mortgage insurance" is another one that catches a lot of people out as well.

[spdrcr]

It is your leasing company's fault for not sending you the PDS. They act as an agent / authorised representative for the broker so you never have to deal with the broker directly.

You need to ask yourself a few questions:

1. How did they provide me with a quote for the lease protection without knowing which policy they were going to use?

I can tell you from experience that they would know exactly which policy they are selling you when they provide a quote. There aren't that many underwriters in the market for this insurance and there is no way that it would be worth someone's time to shop around for the 'best' policy. Any leasing company that offers you redundancy insurance would have already selected the policy they are going to sell.

2. How did lease protection get wrapped into my novated lease?

I don't know who your leasing company is and whether they self fund or have someone like Macquarie provide the funding. Either way someone would have generated an invoice for the lease protection before it was wrapped in your lease.

ps: I hope your leasing company isn't the one I work for otherwise I'll be very upset!

[05C4R]

selling a lease to someone under 25 that is worthless unless you have 5 unbroken years of employment sums up the industry.

my experience with NSW workers comp insurers has tarnished my view of these leeches forever.

[Taymaishu]

Update 4pm:

My lawyer and i received advice from my broker.

The broker has put the onus upon my leasing company to provide a copy of a signed PDS in my name (much to the effect that Simon is saying).

The insurance claim has been re-opened and is being reviewed by the insurer.

The leasing company must now provide proof that they sent, i signed, then returned the PDS to them, as well as this being done PRIOR to me receiving the car. This is impossible for them to do as i signed the novation agreement the morning before i picked the car up.

So, things are looking solid. My lawyer said it's clear they're taking this very seriously now, and finally my broker has started to act on MY behalf, not the insurers' or the leasing company.

Fingers crossed for payday!

Next update is expected Monday when all the documentation has been reviewed.

[alik01]

Good luck Alex, things will work out for sure.

The company has to issue you Financial Services Guide prior to advice and PDS at the time of signing or within 5 days or something. You also need to sign and agrees to all the T&Cs. 5 year job thing is also ridiculous anyway.

APRA has got really tight with all this and brokers, insurers, leasing & finance companies have to abide by all this or face some serious backhanding.

I work this stuff and these guys should get shafted for trying to pull that off. Maks everyone in the industry look worse!

[Taymaishu]

Originally Posted by alik01

APRA has got really tight with all this and brokers, insurers, leasing & finance companies have to abide by all this or face some serious backhanding.

APRA jumped on it when i told them about it - they were really keen to get into it!

Despite everything else, the disgraceful deceptive & misleading conduct undertaken by the leasing agency in telling me completely the wrong thing makes them liable as well.

Then take into account the PDS, FSG, T&C failures, and they could be in some serious, serious problems.

I investigated what would happen from here on in.

My lawyer has advised:

1a. Claim rejected - we recover the funds through a court order on the insurance agency
1b. Claim approved - I'm a happy man and get my cash
2. Regardless of either 1a or 1b, the insurance agency then claims causation against my leasing agency, and recovers the funds from the leasing agency due to breach of contract.

So, the causation is upon the leasing company as they failed to adhere to regulations. This could be terrible for them as the insurance agency would probably default the insurer and make a complaint as well.

You never know - Alex & Insurance Agency vs. Leasing Company!

Anyway, i have been told if it goes through 1a, it could take a fair while. However, as there is interest chargeable on the lease, i am applicable to add interest to the outstanding payments.!



Will see how it goes.

I'm also amused by how many of you work in leasing!!!

[Jeef Beef]

Originally Posted by Taymaishu

APRA jumped on it when i told them about it - they were really keen to get into it!

Despite everything else, the disgraceful deceptive & misleading conduct undertaken by the leasing agency in telling me completely the wrong thing makes them liable as well.

Then take into account the PDS, FSG, T&C failures, and they could be in some serious, serious problems.

I investigated what would happen from here on in.

My lawyer has advised:

1a. Claim rejected - we recover the funds through a court order on the insurance agency
1b. Claim approved - I'm a happy man and get my cash
2. Regardless of either 1a or 1b, the insurance agency then claims causation against my leasing agency, and recovers the funds from the leasing agency due to breach of contract.

So, the causation is upon the leasing company as they failed to adhere to regulations. This could be terrible for them as the insurance agency would probably default the insurer and make a complaint as well.

You never know - Alex & Insurance Agency vs. Leasing Company!

Anyway, i have been told if it goes through 1a, it could take a fair while. However, as there is interest chargeable on the lease, i am applicable to add interest to the outstanding payments.!



Will see how it goes.

I'm also amused by how many of you work in leasing!!!

Urgh you really do not want to go through 1a. Court orders take a ridDONKculous amount of time.

Hopefully your claim is approved and you get your money ASAP!

I don't know all the details here, but it appears that it was your leasing agency that engaged in misleading and deceptive conduct. Your insurance company might be innocent in all this - they let the leasing agents sell their policies on the belief that all conditions of the policy would be properly communicated to clients.

Which brings us to the same conclusion: the insurance company should pay your claim pursuant to the contract you made through the leasing company with them. Since that contract contains no further clauses other that the ones verbally agreed to, you are entitled to your money for 'involuntary unemployment'. After that, the insurance company will bring a claim against the leasing agency, probably for a breach of contract in order to recover the money they paid to you. Since the second part doesn't actually involve you in any way, hopefully this is your result.

If your claim is refused, then it seems you must bring a claim against the insurance company for a breach of a contractual condition.

[Taymaishu]

Originally Posted by Jeef Beef

Urgh you really do not want to go through 1a. Court orders take a ridDONKculous amount of time.

Hopefully your claim is approved and you get your money ASAP!

I don't know all the details here, but it appears that it was your leasing agency that engaged in misleading and deceptive conduct. Your insurance company might be innocent in all this - they let the leasing agents sell their policies on the belief that all conditions of the policy would be properly communicated to clients.

Which brings us to the same conclusion: the insurance company should pay your claim pursuant to the contract you made through the leasing company with them. Since that contract contains no further clauses other that the ones verbally agreed to, you are entitled to your money for 'involuntary unemployment'. After that, the insurance company will bring a claim against the leasing agency, probably for a breach of contract in order to recover the money they paid to you. Since the second part doesn't actually involve you in any way, hopefully this is your result.

If your claim is refused, then it seems you must bring a claim against the insurance company for a breach of a contractual condition.

Exactly, that was the gist of a 5 minute conversation with my lawyer today!

Insurance company pays on the terms agreed to - then insurance company claims against Lease Company for misrepresentation, breach of contract etc.

Or, Insurance company doesn't pay, in which case we letter of demand them and take it from there.

In the one other legal issue I had ever had (not at fault!) I thought i didn't have a case, and it was in causation as well. Turned out I did and got a settlement (not a multi-million dollar settlement ).

The good thing is the Insurance company is taking it VERY seriously, which means they know they have to pay up. We've called their bluff so far and i think they get the message that i'm not backing down

[alik01]

Alex, it won't go to court because the insurance company has to pay for the external ombudsman, and in a long drawn out process, it'll end up costing more
than what you're due.

Just stick to your guns with it and don't budge on what you want. Also ensure they pay for interest on the outstanding amount and also compensation of some sort for your troubles.

The insurance and leasing companies are both likely to cop a fine from APRA and it's insane that they tried to pull that. They make so much out of novated leases that it's just stupid to get too greedy and scare away clients from going down the novation road again.

All up though, best of luck with it and thanks for letting us all know, it's infuriating from
the other side of the fence!

I do see a lot of BMWs in the car parks when I head South for meetings!

[Taymaishu]

Originally Posted by alik01

Alex, it won't go to court because the insurance company has to pay for the external ombudsman, and in a long drawn out process, it'll end up costing more
than what you're due.

Just stick to your guns with it and don't budge on what you want. Also ensure they pay for interest on the outstanding amount and also compensation of some sort for your troubles.

The insurance and leasing companies are both likely to cop a fine from APRA and it's insane that they tried to pull that. They make so much out of novated leases that it's just stupid to get too greedy and scare away clients from going down the novation road again.

All up though, best of luck with it and thanks for letting us all know, it's infuriating from
the other side of the fence!

I do see a lot of BMWs in the car parks when I head South for meetings!

Court is my VERY last resort. Knowing i may be leaving Australia soon will just add to the stress of everything.

We're certainly not budging, and i won't be accepting anything less than what i'm due according to the agreement I made.

The other thing is the risk that the Leasing Company has with the insurer. If the insurer decides to take action because of the Leasing company's action (which will be likely if they pay out), the Leasing Company risks being blackmarked from Insurance companies. Which is a very serious business risk.

Anyway, see how it goes

[alik01]

I think you'll find that the broker gets hung and shot and it's his responsibility send out the FSG, PDS and explain the T&Cs. They'll end up settling so that it quietly goes away, since, as you said, it's likely to get very ugly for them. You'll be fine mate, don't even stress too much.

[Jeef Beef]

Originally Posted by alik01

Alex, it won't go to court because the insurance company has to pay for the external ombudsman, and in a long drawn out process, it'll end up costing more
than what you're due.

Just stick to your guns with it and don't budge on what you want. Also ensure they pay for interest on the outstanding amount and also compensation of some sort for your troubles.

The insurance and leasing companies are both likely to cop a fine from APRA and it's insane that they tried to pull that. They make so much out of novated leases that it's just stupid to get too greedy and scare away clients from going down the novation road again.

All up though, best of luck with it and thanks for letting us all know, it's infuriating from
the other side of the fence!

I do see a lot of BMWs in the car parks when I head South for meetings!

+1. From what I've learned in Civil Procedure, our court system involves a whole shitstorm of paper work.

The insurance company hates going to court as much as you do, possibly more. They do not want the public exposure to add fuel to the 'evil insurance companies' stereotype, or worse, risk further sanctions from ombudsmen.

Originally Posted by Taymaishu

Court is my VERY last resort. Knowing i may be leaving Australia soon will just add to the stress of everything.

We're certainly not budging, and i won't be accepting anything less than what i'm due according to the agreement I made.

The other thing is the risk that the Leasing Company has with the insurer. If the insurer decides to take action because of the Leasing company's action (which will be likely if they pay out), the Leasing Company risks being blackmarked from Insurance companies. Which is a very serious business risk.

Anyway, see how it goes

I'm sure it'll all be solved before you leave the country. They'll want this to go away quickly. Court will cost the insurance company more than what they owe you, so it's very unlikely they'll go down swinging.

It's much easier for them to pay you out and then enact a clause (which in a commercial contract of this nature will no doubt contain) that deals with reimbursement for wrongdoings of the lease company.