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:

Insurance News

Queensland Farmers' Market Threatened with Eviction Over Insurance Dispute

23 Apr 2026: Paige Estritori

In a developing situation in south-east Queensland, the Three Creeks Farm Stall, a popular farmers' market operating in Eileen Hose Park near Gympie, is facing potential eviction due to a dispute over public liability insurance requirements imposed by the Gympie Regional Council. - read more

Record Surge in Insurance Complaints Due to Claim Processing Delays

23 Apr 2026: Paige Estritori

Recent data from the Australian Financial Complaints Authority (AFCA) reveals a significant increase in complaints against insurance companies, with an average of 100 complaints per day. This surge is primarily attributed to delays in processing everyday claims, affecting both home-building and motor vehicle insurance sectors. - read more

Climate Change Contributing to Rising Home Insurance Premiums in Australia

23 Apr 2026: Paige Estritori

Insurance Australia Group (IAG) has released a report indicating that climate change is increasingly influencing the rise in home insurance premiums across Australia. The report highlights that the frequency and severity of extreme weather events, such as severe storms and hailstorms, are escalating, particularly in densely populated regions. - read more

WFI Insurance Highlights Significant Drop in Farm Liability Claims

30 Mar 2026: Paige Estritori

WFI Insurance has reported a notable decrease in farm liability claims across most categories, signaling a positive trend in safety practices within the Australian agricultural sector. - read more

Australian Farmers Confront Rising Insurance Premiums Amid Climate Challenges

22 Mar 2026: Paige Estritori

Australian farmers are currently grappling with a significant surge in insurance premiums, with increases ranging from 20% to 40%, depending on the insurer. This escalation is primarily driven by the rising frequency and severity of natural disasters, coupled with a contracting underwriter market and escalating costs of goods and services. - read more

Widespread Rural Crime Exposes NSW Farmers to Repeated Victimisation

22 Mar 2026: Paige Estritori

A recent survey conducted by WFI Insurance in collaboration with the University of New England (UNE) Centre for Rural Criminology has unveiled alarming statistics regarding rural crime in New South Wales. The findings indicate that over 90% of NSW farmers have encountered criminal activities on their properties, with approximately 30% reporting being targeted seven or more times. - read more

Click for more Insurance News

Farm Insurance Articles

Agribusiness Risk: Liability Issues Facing Australian Farmers Today

The agricultural sector in Australia carves a significant portion of the country's economy, contributing to its GDP and providing employment across rural and suburban areas. Thus, navigating the complexities of agribusiness is not just a matter of crop cultivation and livestock management, but also of understanding the intricate web of liability risks that come with the terrain. - read more

Income Protection for Farmers: Ensuring Stability Through Tough Times

The world of farming is one filled with uncertainties. Weather conditions, market prices, and various other factors can create a highly volatile income stream for those within the agricultural sector. This unpredictability can lead to financial instability that impacts not only the farmers themselves but also their families and the larger rural community. - read more

Livestock Insurance for Aussie Farmers: What You Need to Know

Livestock farming is a significant part of the Australian agriculture industry. As with any business, farmers face numerous risks such as disease, death, theft or extreme weather events, which could cause damage or loss to their livestock assets. Livestock insurance provides cover against these risks, ensuring that farmers are financially protected from any potential financial losses, which could devastate their livelihoods. - read more

What You Need to Know About Crop Insurance for Your Farm

Farming is a risky business. As a farmer, you are at the mercy of the weather, pests, and other challenges that can threaten your crops and your livelihood. That’s where crop insurance comes in. Crop insurance can provide financial protection in case your crops are damaged or destroyed, allowing you to recover from losses and move forward with your farm business. - read more

Understanding Farm Equipment Insurance: What Rural Australians Need to Know

Farm equipment insurance is crucial for rural Australians who rely on their machinery for agricultural productivity. This insurance provides a safety net, helping to mitigate the financial risks associated with equipment loss or damage. - read more

The importance of income protection insurance for hobby farmers

As a hobby farmer, you may not rely on your farm for your main source of income. Perhaps you have a full-time job but enjoy farming as a way to supplement your income and pursue a passion. However, just because farming is a hobby does not mean there aren't risks involved. In fact, hobby farmers face many of the same risks as commercial farmers, such as injury, illness, loss of crops or livestock, and damage to property. - read more

Need a Quote?

Start your free farm insurance quote comparison here.

Knowledgebase

Coverage:
The amount of risk or liability covered for an individual or entity by way of insurance services.

This website is owned and operated by Clark Family Pty Ltd (as Trustee for the Clark Family Trust) 43 Larch Street Tallebudgera QLD 4228, A.C.N. 010281008.

This website is owned and operated by Clark Family Pty Ltd (ACN 010 281 008) as Trustee for the Clark Family Trust (ABN 35 957 893 714), 43 Larch Street Tallebudgera QLD 4228. Clark Family Pty Ltd is an Authorised Representative (AR 1298860) of Unique Group Broker Services Pty Ltd (AFSL 509434) for financial product referrals and an Authorised Credit Representative (ACR 401491) of Saccasan Pty Ltd (ACL 386297). Check our licensing details on the ASIC registers: Clark Family Pty Ltd ACR, Clark Family Pty Ltd AR, Saccasan Pty Ltd, Unique Group Broker Services.

IMPORTANT: We act solely as an introducer and refer enquiries to licensed third-party brokers, insurers, and lenders. We do not provide financial product advice or credit assistance. We may receive a fee or commission from these third parties in consideration for the referral. Before any action is taken to obtain a product or service referred to by this website, advice should be obtained (from either the third party to whom we refer you or from another qualified intermediary) as to the appropriateness of obtaining those products having regard to your objectives, financial situation and needs. Whilst we have our own process for validating the legitimacy of our referral partners, you should independently verify the credentials and licensing of any adviser or provider you engage. Visit the ASIC website for further information.