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Motor complaints take pole position

Out of 28,698 general insurance complaints made to the dispute authority last year, 9565 related to comprehensive motor cover.

This made it the most complained-about product, well clear of home building insurance, which notched 8073 complaints. A look back at previous Australian Financial Complaints Authority annual reports shows home building was top of the charts for the previous two financial years.

Whether it's due to a lack of motor parts, the increased cost of replacement vehicles, or the impact of cost-of-living pressures on maintenance, motor has retaken top spot.

Here is a summary of some key AFCA rulings relating to motor insurance reported by so far this year.

Is a car a motor vehicle if it can’t be driven?

The short answer, according to AFCA, is yes. This dispute was brought by a man who was restoring a 1970 Mercedes-Benz when a winch cable broke and the vehicle rolled down his driveway into a neighbour’s van.

He tried to claim under his Allianz home and contents policy, which specifically excluded motor vehicles.

“The complainant argues the Benz should not be considered a motor vehicle,” the authority’s ruling stated. “In his view a car that does not drive, cannot be driven and is not capable of being driven cannot by definition be considered a vehicle.”

AFCA consulted a dictionary and decided that for the purposes of this claim the car “was a motor vehicle”, and the denial should stand.

Oops, I’ve crashed Dad’s Ferrari

A young man wrote off a Ferrari 448 valued at $390,000 that belonged to his father’s company, and the insurance claim was denied.

AFCA backed insurer SGUAS’ decision because the policy provided cover only for authorised drivers over the age of 30, which the driver was not.

The claimant said the director’s son had been misled by another party into driving, and he had no authorisation from the company to use the vehicle. 

The complaints panel considered whether the loss could have been a theft, but said neither of the unauthorised parties intended to take the car permanently and the man appeared to believe he had permission to drive it.

Section 54 of the Insurance Contracts Act does not assist because the “act” of the young man driving the car “could reasonably be regarded as being capable of causing or contributing to the loss”.

Is an engine fire an accident?

This dispute surrounded an engine fire that destroyed a BMW valued at more than $43,000.

The blaze was caused by a fuel line injector leaking onto electrical wiring. Allianz said it was caused by wear and tear and was therefore mechanical failure, and the claim would not be paid.

The policy covered accidents defined as “a sudden, violent, external, unusual and identifiable specific event which happens unexpectedly and is unintended by the insured person”, and AFCA decided this applied to the incident. It considered whether it was “external” and concluded it was “external to the engine”.

AFCA couldn’t find anything in the policy that excluded wear and tear or mechanical failure. The product disclosure statement did require insureds to keep their vehicles “well maintained and in a roadworthy condition”, but the ombudsman said the owner had the car regularly serviced.

“Even if I accept the cause of the injector leak was wear and tear, or mechanical failure, I cannot conclude the reason for the wear and tear/mechanical failure was lack of maintenance,” the ruling said.

Allianz was ordered to pay the claim.

Buy insurance before you crash, not after

This cheeky driver admitted to buying a policy hours after an accident that happened while he was uninsured – but still took the claim denial all the way to an AFCA determination.

His vehicle was damaged about noon on July 23 last year, and he bought a policy with Suncorp at 5.52pm the same day.

He argued that because there was no start time on the policy documentation, cover began at 12.01am on July 23.

AFCA dismissed the man’s position as “unreasonable” because nobody should expect a policy to provide cover for incidents that occur before it is arranged.

Even if the start time argument had held up, the man probably misrepresented the condition of the vehicle at purchase. When asked if there was any pre-existing damage, he answered “no”.

“This answer appears to be inconsistent with the claim lodgement which says there is damage to the front passenger-side quarter panel and door on the complainant’s vehicle,” AFCA said.

Unregistered means uninsured, right?

Wrong. A woman whose car was rear-ended by another driver has won a claim dispute despite her vehicle’s registration running out months before.

RACQ-backed Carpeesh denied the claim and cancelled the woman’s policy, but AFCA ruled it was wrong to do so, because there was no clear exclusion that applied.

The insurer tried to argue the vehicle no longer met the definition of “your car”, and that the vehicle was not roadworthy, but the ombudsman was not convinced.

“Even if I accept the vehicle was unroadworthy (which I do not), in these circumstances, section 54 of the [Insurance Contracts Act 1984] would assist the complainant,” the authority’s adjudicator said. “This is because the insurer has not established the fact the vehicle was unroadworthy was reasonably capable of causing or contributing to the loss, or that it prejudiced its position.”

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