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Insurer not required to cover 'reckless and unsafe' driver

A driver who crashed his car in a single-vehicle accident has lost his appeal to overturn his insurer’s claim denial after it cited unroadworthy vehicle and reckless driving exclusions. 

The man told the insurer he crashed his 2020 BMW X4 at around 8pm on May 22 last year while “attempting to navigate a bend in the road”. He says he was startled by the bright lights of an oncoming vehicle, causing him to lose control and collide with a tree. 

Blue Zebra initially informed the insured that the claim had been approved for a quote and would be assessed as a total loss.

The insurer confirmed on June 28 that it would purchase a new vehicle for the claimant, pending approval from the vehicle’s financier and if it had “no concerns” following an interview with the driver about the accident. The purchase would be based on a $197,214 quote provided by the complainant. 

Blue Zebra acknowledged that it placed an order on a new vehicle despite waiting for further claim information, as the replacement would take about ten months to arrive. The complainant was not willing to wait that long, so on August 8, he informed the insurer that he had placed an order, which included a $2000 deposit, with another dealership to receive the vehicle by the end of the month. 

An insurer-appointed motor vehicle investigator, referred to as AM, reported that the insured vehicle had several safety issues at the time of the crash, including unroadworthy tyres and disabled stability controls.

AM noted crash data that showed the driver was driving 12km/h above the road limit and took “deliberate actions” to increase rather than decrease his speed moments before the accident. 

“My overall examination of the Insured Vehicle and capture of data from its on-board computers indicates it was travelling above the speed limit of the road, on tyres that were unroadworthy and with the ESC/DSC disabled by the driver who was driving the vehicle very enthusiastically,” AM said.

Following an interview with the complainant regarding the accident, Blue Zebra issued its claim denial, citing exclusions relating to the vehicle’s “unsafe and unroadworthy” condition and the complainant’s “wilful and reckless” use of the car. 

The insured says the car was in “pristine condition” before the accident, noting that it had been appropriately serviced and only driven about 19,000km in total. He says he was unaware of any issues with the tyres and would have had them fixed if he had known.

The man also disputes that he had driven dangerously, saying that he would not have endangered  himself or his son, who was in the passenger seat at the time of the accident. 

But the Australian Financial Complaints Authority (AFCA) was not convinced by the complainant’s assertions, saying the insurer was entitled to decline the claim based on the provided evidence.

AFCA accepted that AM’s report “unequivocally concluded that the vehicle was unroadworthy,” in contrast to the complainant's evidence.

The ruling also accepted that the insured “was more likely than not driving in a wilful and reckless manner immediately prior to the accident,” given that he had been driving over the legal speed limit, despite his admission of being “unfamiliar” with the road.

AFCA agreed that Blue Zebra should compensate the driver for financial losses the claimant incurred due to its initial indications that the claim would be accepted, including the $2000 deposit the policyholder paid.

Click here for the ruling.