A policyholder has failed to win an upgraded payout for her husband’s lost hearing aids, which were covered under her home and contents insurance.

The claimant had insured the items for $7000 and believed she should be entitled to the full sum.

However, after the loss, she moved swiftly to buy replacement aids for $4108, and RAC Insurance then paid her that amount – minus a $200 excess – based on an invoice she provided.

The complainant argued she should be paid an extra $2892 because the policy said the insurer would “repair or replace the item(s) to a condition as near as possible to its condition as at the date of damage”. She provided an invoice for the original devices proving she paid $7393 for them.

An Australian Financial Complaints Authority ruling on the matter notes: “She says what she decided to purchase with the cash settlement is irrelevant to the claim payout.”

But the insurer said its action was in line with policy wording that stated: “If we elect to pay you a cash settlement, we will pay the amount that it would cost you to replace the item(s).” 

AFCA agrees with the insurer.

“It was the complainant’s own personal decision to replace the hearing aids through a different supplier than the supplier she originally purchased the hearing aids from,” an ombudsman said.

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“I do not accept the insurer is responsible for this decision, nor do I accept the complainant is entitled to an amount greater than what she paid for the replacement.

“I can only conclude the complainant was satisfied the hearing aids she chose to purchase were suitable replacements for the hearing aids insured under the policy.”

The woman also sought non-financial loss compensation for stress caused by the insurer’s claim handling.

“She says the insurer did not listen to her arguments and was rude to both her and her godson during phone calls discussing the claim,” AFCA says.

“The complainant is elderly and notes she has been a long-standing customer of the insurer.”

But the ombudsman has ruled out compensation, concluding that while “the conversations may have been tense given the complainant’s displeasure with the claim settlement amount, I do not accept this shows the insurer mishandled the claim.”

See the full ruling here.