A farm pack policyholder will be covered for vehicle damage caused by his cow despite failing to pay a renewal premium before the due date.

QBE rejected a claim for the June 14 2024 incident, saying the policy had expired the day before.

The complainant said since at least 2018 he had paid his premiums “exceptionally late” with cover renewed and backdated, and the insurer was on risk when the incident occurred. It had changed its practice regarding the 2024-25 premium, he said.

The policyholder asked the insurer to reimburse the cost of the animal, cover a third party’s claim for more than $103,000 and pay legal fees.

QBE said it provided adequate notice and a reinstatement deadline, and followed the statutory process for policy lapses and cancellations. Previous agent and branch discretionary decisions did not guarantee late payments would be accepted every policy period.

In May 2024, an agent sent an email offering amended renewal terms that excluded home and contents due to the property’s poor condition. He said the insureds “gave the impression they would be seeking coverage with another insurer”.

A system-generated lapse letter on June 28 advised payment must be received by July 8 to continue cover. On August 27, the agent received a cheque but declined to reinstate the policy.

The Australian Financial Complaints Authority says the complainant notified the agent of a potential claim on June 21 and received an email containing a claim form and referencing the cow incident.

AFCA says the insurer did not provide evidence the complainant had indicated he would not renew, and the potential claim notification would suggest otherwise.

The complainant had a “reasonable and legitimate expectation” he could reinstate the policy even if his premium was late, given previous practices, and that he would be made aware if that situation was changing.

The insurer, through the agent, should have disclosed that it would not accept a late payment for renewal in this instance and, had it done so, the premium would probably have been paid, also taking into account that the complainant had not arranged cover elsewhere, AFCA says.

The insurer was ordered to reinstate the policy and consider the claim, provided the premium was paid, and reimburse lawyer fees up to $5000.

See the decision here.