Barton Insurance ordered to pay for vehicle theft after communication failure

The Office of the Ombud for Financial Services Providers has ordered Barton Insurance Brokers to pay R681,250 to a client whose vehicle theft claim was rejected due to policy changes they failed to communicate.

The case, which revolves around the theft of the client Toyota Fortuner on 2 July 2023, highlights the risks faced by insurance clients when companies do not adequately communicate policy updates. The client had taken out an insurance policy on his vehicle on 1 August 2020, which stipulated that a factory-fitted alarm, immobiliser, and a tracking device were necessary for coverage. However, a new requirement for a secondary tracking device was introduced on 1 April 2023. The client asserted he was never informed of this change.

According to Barton Insurance, they had sent an email notification of the change to the address of his wife which was recorded in their system. However, the client contends he was the sole policyholder and had been engaging with Barton using his own email addresses for over 31 months prior to his vehicle’s theft. He claims that Barton’s reliance on outdated contact information amounted to negligence, as it failed to ensure that he had received critical information regarding changes to his coverage.

The case took a turn after the Financial Services Tribunal found in favour of the client following his objection to the initial ruling, which closed the case in January 2024. The tribunal determined that Barton had a duty to update client records and notify the client directly of the crucial tracking device policy changes. The ruling pointed out that it was unreasonable for Barton to rely on an email address belonging to his wife, particularly when it’s evident that client, as the sole policyholder, should have been informed through his primary communication channels.

“This ruling emphasizes the legal obligation of financial service providers to ensure effective communication with their clients,” stated the Ombud’s office in its judgment. “Merely sending information without confirming receipt falls short of the standard expected in the industry.”

Barton’s defence hinged on standard procedures, which included sending notifications to identified clients and following up with a phone call. However, the Ombud’s office found that no evidence existed for such a follow-up call to the client, leading to a further judgement of negligence. Such oversight not only failed to meet industry standards but also resulted in significant financial loss for the client, who could have easily adhered to the new tracking requirement had he been properly informed, it was stated in the ruling.