The industry ombudsman has split court-ordered legal costs between an insurer and a motorist after finding both were at fault for claim delays after a car crash.

Allianz will contribute almost $5000 towards its policyholder’s legal bill, the Australian Financial Complaints Authority says. The driver’s delayed claim lodgement and the insurer’s subsequent inaction both contributed to the costs, it finds.

After the smash in July last year, a third party sought $22,873 for vehicle repairs. They took legal action that October and a court ordered the Allianz policyholder to pay the claim, interest and $9879 in costs.

The policyholder said he told Allianz of the accident in July and had expected it to handle the matter. Allianz said his initial contact was an online enquiry and it directed the man to lodge a claim formally on August 4.

The motorist did not lodge the claim until November 18, after filing a defence to the court proceedings the previous day.

AFCA finds the policyholder failed to take necessary steps to lodge a claim, despite being directed to contact the insurer’s claims team. Allianz was not responsible for costs incurred before it had a reasonable opportunity to assess the claim.

But the ombudsman has also criticised the insurer for adding to escalating legal costs by not settling the claim sooner.

The policyholder asked Allianz to take over proceedings on November 21, but the insurer did not act until January, when a pre-hearing conference was approaching.

“The insurer is experienced in motor vehicle litigation and could have taken steps to settle the entire proceedings by consent to minimise the costs and explained the risks of a cost hearing to the complainant, rather than simply directing the third party to recover costs from him,” AFCA said.

The authority has ordered the insurer to pay $4962 for costs relating to the pre-hearing conference and court attendance. The motorist must pay the remaining $6917 of the judgment, including $4917 for costs.

An AFCA member said: “I consider this a fair outcome as the parties have each contributed approximately 50% towards the cost order.”

The policyholder has been awarded $500 compensation for stress and inconvenience, but Allianz’s deduction of a $2000 excess is upheld. CCTV footage showed the motorist attempting to overtake the other vehicle as it turned right, and failing to obey a stop sign.

See the ruling here.