AFCA backs decision to cancel cover over driving ban
A driver who failed to tell her insurer she received a three-month licence suspension has lost an appeal to the complaints authority to have her policy reinstated and a crash claim paid.
The complainant informed Auto & General of the ban only when lodging a total loss claim for her Toyota Kluger after she hit a parked vehicle last May.
She said the suspension related to a speeding offence in April 2021 when she was taking her severely ill son to hospital, and it was imposed by a court, without conviction, in October 2023.
The woman said she did not believe she was required to disclose the information when the policy renewed last March.
She did not read the policy document and looked at it only to see how much she had to pay.
Auto & General said it had asked the insured if she had been “under a licence suspension or cancellation, or had any licence restriction” in the past five years, to which she answered no.
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It said her decision not to read the documents and provide accurate answers was a failure to take reasonable care to avoid misrepresentation, which cleared it to deny the claim and cancel the policy.
The insurer told the Australian Financial Complaints Authority the licence suspension, combined with a “non-recoverable loss” claim made in the past five years, made the woman an unacceptable risk according to its underwriting guidelines.
Non-recoverable loss claim was defined as “any incident where the driver of the insured vehicle was either fully or partly responsible; any incident where no identified person was responsible (excluding theft, attempted theft or malicious damage); or any theft, attempted theft or malicious damage incident, regardless of whether the responsible party was identified”.
The authority accepts the non-recoverable loss claim meant that under the insurer’s rules, the woman was ineligible for discretion to be applied regarding the driving ban.
“The insurer showed the complainant’s driving and claims history meant she was no longer an acceptable risk and it would not have renewed the cover had it known of them,” AFCA said. “It would not be fair to require the insurer to cover the claim in these circumstances.”
See the ruling here.