Donnellys Claim Stories

At Donnellys, we strive to ensure our clients have their claim paid in as timely and stress-free manner as possible. We take an active role in the claims process as necessary, acting as the representative of our client with their insurer at what is often an extremely stressful time in their life. Getting claims paid for our clients is the ultimate purpose of what we do and our team prides itself on being there for clients who are thankful of having had appropriate insurance cover in place.

We would like to share with you some claims stories to demonstrate the value of having the correct insurance coverage in place when a claim occurs.

 

Technology Claim Example

Assumption of Contractual Liability Claim Case Study

A major department store engaged an IT company to provide a system for their customers to purchase products over the internet. The contract stated that the contractor was required to indemnify the retailer against:

All loss, damages, claims, liability or expenses incurred by or awarded against the Principal arising directly or indirectly from:

(a) “breaches by the contractor of this agreement and

(b) any act or omission of the contractor relating to this agreement, including negligence, or   arising as a result of the performance or non-performance of the Professional Services.”

The IT system supplied didn’t function correctly. Customers couldn’t place orders and payments weren’t received. As a result, the retailer sued the IT provider for $1.2 million for breach of contract and their loss of profits.

The ‘Assumption of Contractual Liability’ cover is a special feature of the AIMS Combined Liability exclusive policy underwritten by professional risks specialists, Vero Insurance.

Donnellys is a member of the AIMS national network of insurance brokers which has developed a “best of breed” market leading Technology Combined Liability policy for the clients of AIMS brokers.

 

Professional Indemnity insurance claims examples

As these case studies demonstrate, any professional service provider can be held liable for their actions. They are examples of the types of claims that may be covered under a Professional indemnity policy, but not under a Public Liability policy.

The building consultant
A building consultant was involved in constructing a house. The owners claimed that the weatherproofing failed and sued the consultant alleging negligence. The matter went to a judicial settlement conference.

The building consultant was exonerated but still had to pay over $20,000 in legal costs.

The accountant
An accountant was asked by the client to consider the accounts of the business he planned to buy. The client’s business partner had an accountant who provided the figures. The client went on to buy a share in the business. The business did not do well. The client then claimed against both accountants for providing negligent advice. The claim was later settled and the second accountant paid $25,000 to the client in settlement.

Although the first accountant was not found negligent, his defence costs amounted to over $100,000.

The building designer
A building designer prepared a town planning application for a self-storage facility using computer-assisted design. While preparing the drawings, there was an error inputting data into the system resulting in the development being three metres shorter than the town planning drawings.

The property was subsequently sold to a development company. During construction it was discovered that only 198 self-storage units would be constructed and not 235.

The property developer claimed over $500,000 in damages due to loss of income and value of business.

The occupational therapist
An occupational therapist interviewed the claimant for a position as an accredited rehabilitation provider. The therapist rejected the application as he felt that the claimant did not have the requisite WorkCover qualification.

In the same year the occupational therapist discovered that the claimant was working as a case manager for another rehabilitation provider. As the occupational therapist was concerned that the claimant did not have the qualifications he wrote an email to WorkCover and the members of the Association of Rehabilitation Providers in the Private Sector.

The claimant alleges that he is appropriately qualified to practice and that the email was defamatory and has injured his credit, reputation and occupation.

The claimant is seeking compensation for general loss of business, custom, and aggravated damages in excess of $300, 000.

*Examples produced by Vero Profin for public information.

 

Life Cover Claim Story

Karen was a 38-year-old office manager, working for a manufacturing company. Two years earlier, she and her husband had divorced, leaving her with a mortgage and sole responsibility for the care of her 14-year-old son, Steven. Now a single parent, Karen became more aware of her financial vulnerability. At the suggestion of a friend who had been in similar circumstances, she consulted a financial adviser.

The adviser carefully talked her through her various options and devised a plan to financially protect her and son Steven, if something ever happened to her. Steven had always worked hard and done well at school, and she was particularly concerned to make sure that he would be able to afford to go on to university, if he wanted.

Karen bought some life cover and trauma policy for $500,000. She also purchased income protection policy, in case she ever became temporarily unable to work.

Less than two years later, Karen went home from work early one afternoon with a bad headache and the feeling she might be getting flu. Later that day she lost consciousness and was rushed to hospital. She had suffered a brain hemorrhage, and died that evening without regaining consciousness.

Under her life policy, Karen had nominated Steven as her sole beneficiary. He received the $500,000 through a trust fund set up by the fund’s solicitors.

Steven is now working hard for his HSC, with plans to obtain a university degree to set himself up for the future … thanks to his mother’s foresight to arrange life cover for his future lifestyle protection.

 * Claim story courtesy of Asteron Life Solutions

 

Critical Illness Trauma Cover and Income Protection

Despite being a non-smoker this client unfortunately developed throat cancer at 54 years of age. With a wife, three dependent children and a busy building and construction business to take care of, the last thing he could afford was a significant amount of time away from his business and for his income to be at risk.

Receiving a full Trauma Cover payment and six months’ Income Protection benefits paid up-front enabled the client to take the time away from work he needed to focus on his health, rather than also worrying about his business. It also meant there were funds available to ensure his business was in good shape when he was ready to return to work. Thankfully the client has now recovered, his business is expanding and his family’s lifestyle is intact.

Claim Amount Received: $150,000 from Trauma policy and $24,000 from Income Protection

Donnelly Financial Services Pty Ltd broker representative claim story

 

Income Protection

A fun weekend ski trip to Perisher in New South Wales nearly ended in tragedy for a young client – and on the day before he was due to start a new job!

On the Sunday morning of weekend ski trip with friends, the client didn’t quite stick the landing on a large jump. Unfortunately, his back absorbed the full impact of a very solid and icy landing, causing a compression fracture in his spine. When our office took the first call from him, he was immobilised in Cooma Hospital and was not yet sure how much damage had been done to his spine and whether or not his spinal cord had been damaged.

We contacted the insurance company straight away and arranged claim forms to be emailed to him that day. The insurer was able to call the client directly to complete a tele-claim over the phone, which provided them with sufficient information to begin processing his claim while they awaited medical information from his doctors.

After being transferred by air ambulance to the spinal unit at the Royal Adelaide Hospital, the client received the fantastic news that his spinal cord was intact and that he would make a full recovery from his injuries. He would, however, need to take 3 months off work, spending much of his time flat on his back to ensure he didn’t cause additional damage to his spine. Being between jobs at that time meant our client did not have any sick leave, as he had just left his previous job and had been due to start a new job on the Monday after the accident!

Thankfully his comprehensive Income Protection policy provided him with an income from the day of his accident and the additional benefits included in his policy enabled him to cope with the many additional medical and other costs he had incurred. Once the insurer received all of the medical information, they paid the client 3 months’ benefit up-front, reimbursed the costs incurred by his fiancé and parents for flights and accommodation in Cooma and contributed $2,000 towards the cost of his transfer to Adelaide by air ambulance.

The client received claim benefits which enabled him to keep paying his mortgage, cover his out of pocket expenses, focus on his rehabilitation and get himself back to work. Thankfully he has made a full recovery, and able to work full-time. !

Claim Amount Received: $14,000 from Income Protection policy

Donnelly Financial Services Pty Ltd broker representative claim story

 

Key Person and Buy / Sell Cover

This client was a director and 50% owner of a specialist engineering company. At age 62 he developed chronic debilitating migraine headaches, which were of such a severity that he required surgery to implant sensors in his brain to assist with controlling the pain he was suffering. Unfortunately, his condition had reached a point that he was no longer able to work at all.

This placed his personal finances and the future of the company at risk. Fortunately, the client was eligible for a Total and Permanent Disability claim, as he would never again be able to work in his own occupation.

Key Person Cover

As this client was responsible for 50% of the company’s revenue, we had put in place a Total and Permanent Disability (TPD) and Life Cover policy on his life, which would protect the business by providing a lump sum to replace the revenue generated by him in the event he was deceased or permanently unable to work. This type of cover is known as Key Person Cover and can be put in place on any person that is key to the ongoing success of a business, whether an owner or an employee.

For the client and his business partner, the $250,000 benefit paid from the Key Person TPD policy prevented the company from experiencing a 50% drop in revenue. This lump sum replaced revenue that would otherwise have been generated from business activity and enabled the company’s finances to pass through this period of immense difficulty unscathed.

It also meant that as the business’ finances were intact, our client’s 50% share of the business was still a saleable asset with a valuation unchanged by the drop in revenue. This left the client and his business partner in a position where a fair commercial transaction could now take place for the sale of the client’s share of their business.

Buy / Sell Cover

This client and his business partner had in place a legally binding Buy / Sell Agreement. This agreement guaranteed the transfer of the shares of an outgoing director to the remaining director in the event that either partner was unable to continue in the business due to death or disability, in return for payment for the outgoing director’s share.

Having a Buy / Sell Agreement in place provided the client with certainty, in that he could sell his share of the business to his business partner and be guaranteed of funds being available to pay him for his share. It also provided his business partner with certainty in that he knew he was the only party with the right to purchase those shares and he did not have to borrow money to do it, as the Buy / Sell insurance provided the funding.

The agreement stated that when the insurer determined the client was unable to ever work again in his own occupation and they paid the benefits of the TPD insurance policy to him, this would be the trigger for the transfer of ownership of his share of the business to take place. The TPD payout of $300,000 was considered payment for his shares of the business and therefore his business partner was now the sole owner of the business.

The combination of the Key Person Cover and the Buy/Sell agreement ensured the client could exit the business, realise the value of his shareholding and his business partner now wholly owns a business that is still in good shape despite losing 50% of the source of its revenue from business activity. This has saved the client and his business partner untold stress by providing certainty through a straightforward business transaction that could otherwise have dragged on for many months.

This client could then utilise the claim payment he received to focus on his treatment.

Claim Amount Received:             Key Person $250,000        Buy / Sell $300,000

Donnelly Financial Services Pty Ltd broker representative claim story