Professional Indemnity

A mortgage broker received a complaint through AFCA regarding a $200,000 loan obtained for a third party. The third party alleged that the loan was taken out by her de facto partner using the available equity from their mortgage without her knowledge or consent.

After the loan was settled, the business deteriorated, and third party’s relationship with her de facto ended. He sold the business for $20,000, leaving her with an outstanding debt of $180,000 on the mortgage which she was unable to sustain due to the high repayments. As a result, the third party requested monetary compensation from the mortgage broker for arranging an unsuitable loan.

The mortgage broker’s insurer provided a solicitor who directly communicated with AFCA regarding the complaint. It was determined that the entity the mortgage broker was working for when the loan was obtained should also be implicated in the complaint. AFCA assigned partial responsibility to the entity for the damages suffered by the third party, and the insurer paid $75,000 which included damages and legal costs to the mortgage broker.

The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Cover for a claim will depend on the specific circumstances around the loss and would be subject to the terms and conditions of the policy concerned.

As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained in this email is general only.  Coverage for claims on the policy will be determined by the insurer, not BizCover for Brokers, and will depend on the specific facts and circumstances involved.