Farm Insurance :: News

Share this news item!

AFCA Rebukes IAG Over Mismanaged Flood Damage Claim

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Insurance Australia Group (IAG) has been mandated to reexamine a denied claim and offer compensation to a driver whose "vulnerable status" was overlooked.

Following a flood incident in remote Northern Territory, the driver submitted a claim on March 9 last year after his car was trapped in the floodwaters. He was transporting a friend to retrieve her vehicle when the floodwater immobilized his Holden Commodore, valued at $32,000.

The driver reported significant water intrusion into the vehicle, compromising its engine and electronics. He and his passenger needed over 15 minutes to push the vehicle out from the water.

IAG arranged for the car to be transported to Darwin for inspection. In June, the mechanic’s report indicated no water damage to the engine or interior, yet traces of water were discovered in its oil.

Another mechanic’s assessment found no water in the air filters or throttle but noted rust corrosion, indicative of water presence.

Due to the claim being filed six days after the policy initiation, IAG flagged the claim's legitimacy and handed it over to their fraud investigation unit. The unit interviewed both the driver and passenger and demanded multiple documents, including mobile records, a car purchase contract, and service history.

According to the Australian Financial Complaints Authority (AFCA), the driver submitted all requested documentation with the exception of his bank statements. Unfortunately, his mobile phone records were not provided in the correct format.

The insurer contended that further investigation was contingent on receiving all requested information and upheld their decision to decline the claim pending additional data.

However, AFCA challenged IAG’s stance, arguing the driver had sufficiently complied with the investigation despite the missing documentation. The authority stated that evidence from the two expert reports supported the driver’s account of events.

The authority emphasized the presence of water in the vehicle, citing the seized engine, evident corrosion in all cylinders, the presence of surface rust, and the milky oil in the oil filter, all hinting at water contamination.

Additionally, AFCA criticized IAG for not recognizing the driver’s vulnerability, stemming from his remote residence, financial duress, and health issues, including a broken leg.

AFCA noted that the insurer's mishandling of the claim had caused avoidable stress and delays for the driver. Consequentially, IAG was compelled to pay a penalty of $5400 for non-financial losses.

"The insurer should either properly execute its investigation or make a claim decision based on the available information," AFCA stated. "Unreasonable demands for additional information have resulted in undue stress for the claimant. IAG must compensate him for the resulting inconvenience and emotional distress."

Published:Sunday, 2nd Jun 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Rate this article

0 Comments

No comments yet. Be the first to share your thoughts.

Insurance News

What Allianz’s Farm Cover Revamp Means for Farmers

21 Jul 2026: Paige Estritori

Allianz Australia has refreshed its farm pack insurance, with the updated product announced on 20 July 2026. For farmers and rural property owners, the significance is less about one insurer changing a product and more about what it signals across the broader farm insurance market: insurers are trying to make cover easier to understand while adjusting policy features to better match modern farming operations. - read more

What Bushfire Resilience Ratings Mean for Farmers

07 Jul 2026: Paige Estritori

More Australian insurers are now recognising household bushfire resilience ratings, a development rural and regional property owners should watch closely as risk-based pricing becomes more visible across the insurance market. NAB and CommBank insurance brands have joined the program, alongside existing participants including NRMA Insurance and Suncorp, meaning a significant share of the home insurance market is now engaging with assessed bushfire mitigation. - read more

Cyclone Pool Delivers Relief, But Farmers Still Need to Check Cover

30 Jun 2026: Paige Estritori

The Australian Competition and Consumer Commission�s final monitoring report on the cyclone reinsurance pool has delivered a mixed message for rural and regional northern Australia. The pool appears to have helped ease some premium pressure for medium to high cyclone-risk areas, including reductions across home, strata and small business building and contents cover. For farm families and agribusinesses in cyclone-exposed regions, that is welcome news after years of rising costs and limited choice. - read more

El Niño Outlook Puts Farm Risk Planning Back in Focus

23 Jun 2026: Paige Estritori

Australia’s latest El Niño declaration has turned seasonal risk planning into an immediate priority for many rural and regional businesses. The Bureau of Meteorology confirmed El Niño conditions in mid-June, with forecasts indicating the tropical Pacific is likely to keep warming through the coming months and remain a factor until at least the end of the year. - read more

NRMA's Departure from Farm Insurance: What It Means for Australian Farmers

16 Jun 2026: Paige Estritori

In a significant shift within the Australian insurance landscape, NRMA has announced its withdrawal from the farm insurance market, ceasing the sale of new policies as of July 1, 2025. This decision affects both Hobby Farm Insurance and Rural Farm Insurance offerings, leaving many farmers in search of alternative coverage options to safeguard their livelihoods. - read more

New Partnership Strengthens Risk Management in Australia's Protected Cropping Sector

16 Jun 2026: Paige Estritori

Protected Cropping Australia (PCA) and Achmea Farm Insurance have announced a strategic partnership aimed at bolstering risk mitigation and resilience within Australia's protected cropping sector. This collaboration seeks to empower growers by providing tailored insurance solutions and promoting best practices in risk management. - read more

Click for more Insurance News

Farm Insurance Articles

Navigating Farm Succession: A Step-by-Step Guide for Rural Australian Families

Welcome to our comprehensive guide on navigating farm succession for rural Australian families. The journey of passing on a family farm from one generation to the next is both a critical and challenging milestone. Recognizing that every farm has its unique story and set of circumstances is fundamental to the process. - read more

The Impact of Weather on Farm Insurance Rates: What You Should Know

Farming in Australia is a dynamic venture that requires careful planning and management. One of the crucial aspects every Australian farmer should consider is farm insurance. It provides a safety net against potential financial losses arising from various risks. These include natural disasters, damage to crops, livestock issues, and accidents on the farm property. - read more

Essential Coverage vs. Optional Add-ons: Balancing Protection and Costs

For Australian farmers, having the right insurance coverage isn't just a safety net—it's an integral part of sustaining their livelihood. Natural disasters, unpredictable climate conditions, and the inherent risks of agricultural production underline the critical importance of robust insurance for the agricultural community. As farmers navigate the complexities of insurance, understanding the basics becomes the first step toward securing their assets and ensuring the continuity of their operations. - read more

Investing in Cybersecurity: A Crucial Step for Sustainable Farming

Cybersecurity refers to the practice of protecting systems, networks, and programs from digital attacks. In the context of agriculture, it involves safeguarding the digital solutions and technologies that have become intrinsic to modern farming operations. As technological advancements continue to revolutionize the farming landscape, the importance of cybersecurity in securing farm data and operations has become more pronounced. - read more

How to Save Money on Your Farming Insurance Premiums

Farm insurance premiums are influenced by the type and level of cover you choose, the risks associated with your farming operation, your deductible or excess, and how accurately your policy reflects your current assets and activities. Saving money is not just about finding the lowest premium; it is about understanding what you are paying for and avoiding unnecessary gaps or duplicate cover. - read more

Income Protection Insurance for Hobby Farmers: What to Consider

Hobby farming may not be your main source of income, but it can still involve real financial commitments and physical risks. Income protection insurance is designed to provide a replacement income if illness or injury prevents you from working, subject to the terms of the policy. For hobby farmers, understanding how this cover works can be an important part of managing both personal and farm-related financial risk. - read more

Need a Quote?

Start your free farm insurance quote comparison here.

Knowledgebase

Insurance broker:
An agent acting on behalf of the insured (not the insurance company) who negotiates the terms and cover provided by the insurer in the insurance policy.