Customer Wins in Insurance Dispute Over Laser Equipment

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.

The crux of the dispute arose when the salon's laser machine broke down in February, and repair costs were estimated at $18,069. The salon owner had insured the machine for $50,000 in December of the previous year, following its second-hand purchase and refurbishment in 2012 for $66,000.

Despite acknowledging the damage, QBE Insurance reduced its compensation to $7,286, citing an underinsurance clause. QBE claimed that due to the model being discontinued, a replacement would necessitate insuring at $155,000.

The insurer's clause stipulated that if the sum insured was less than 80% of the "total new replacement value," the liability could be adjusted accordingly. However, the salon owner challenged this assessment, arguing that a comparable refurbished machine was valued between $30,000 and $45,000.

The Australian Financial Complaints Authority (AFCA) intervened, siding with the salon owner. AFCA declared that policy wording began ambiguous, noting discrepancies in terms such as "full value" and "total new replacement value", creating confusion about the clause's intent.

AFCA clarified: "When the policy is read as a whole, it indicates the laser should be insured for its full value, or what it would cost to replace with a similar laser in a similar condition." They refuted QBE's expectation that the salon owner should have insured the laser for $155,000, indicating she would never recoup more than $50,000 under policy terms.

This ruling mandates QBE to cover the repair costs, less the policy’s deductible. The case emphasizes the importance of clarity in insurance contracts and equitable treatment of claims.

Published:Wednesday, 27th Nov 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

Clear

Europ Assistance Australia Now Underwriting Its Own Travel Insurance Policies

07 May 2026: Paige Estritori

In a significant development for the Australian travel insurance sector, Europ Assistance Australia (EAA) has been granted a general insurance licence by the Australian Prudential Regulation Authority (APRA). This authorisation enables EAA to underwrite its own travel insurance products, marking a pivotal step in its commitment to the Australian market. - read more

ATIA Pushes for Permanent Travel Insurance Sales Rights for Agents

07 May 2026: Paige Estritori

The Australian Travel Industry Association (ATIA) is intensifying its efforts to secure a permanent authorisation for travel agents, tour operators, and accredited travel businesses to sell travel insurance at the time of booking. This initiative follows an exemption granted in 2021, which is set to expire in October 2026. - read more

Nib Divests World Nomads International Travel Insurance to Focus on Core Health Services

07 May 2026: Paige Estritori

In a strategic move to concentrate on its core health insurance operations, Nib Holdings has entered into a binding agreement to sell its World Nomads international travel insurance business to International Medical Group (IMG) for a cash consideration of $67.5 million. This transaction is subject to regulatory approvals and customary conditions, with the majority of proceeds expected within the current calendar year. - read more

ACCC Halts IAG's Proposed Acquisition of RAC Insurance

07 May 2026: Paige Estritori

The Australian Competition and Consumer Commission (ACCC) has intervened to block Insurance Australia Group's (IAG) proposed $1.35 billion acquisition of RAC Insurance, citing significant concerns over reduced competition in Western Australia's insurance sector. This decision underscores the regulator's commitment to maintaining a competitive market landscape, particularly in essential household insurance lines. - read more

Middle East Conflict Drives Up Costs for Australian Insurers

07 May 2026: Paige Estritori

The ongoing conflict in the Middle East is exerting significant pressure on Australian insurers, leading to increased costs across various lines of business. The Insurance Council of Australia (ICA) has reported that rising fuel prices are disrupting supply chains, escalating the cost of materials, and delaying labour availability for repairs to homes and vehicles. - read more

Click for more Insurance News