A motor policyholder has won a dispute with his insurer, which alleged his theft claim was fraudulent after a “wholly unsatisfactory” investigation that has drawn criticism from the complaints authority.

The claimant left his car at a train station in September 2023 and found it was missing when he returned the next day.

A few days later, police recovered the vehicle – which had been burnt out – and arrested a thief who had an “extensive record for vehicle thefts”.  

But insurer Auto & General Services denied the man’s claim, saying it was not satisfied his account was truthful and raising concerns the theft was pre-arranged. 

It noted the claimant was overdue on $7592 of loan repayments for the vehicle and had not tried to contact his lender to address this, despite being issued a repossession notice.

Auto & General engaged a forensic locksmith, who suggested the thief gained access with a key.  

The expert said the engine would not have worked without a “mechanically and electronically correct key”, and neither of the two keys provided by the claimant appeared to have been duplicated. The locksmith said the vehicle’s strong security system would have deterred most thieves, and thefts of such cars typically involved “unauthorised use or theft of keys”.  

The claimant acknowledged his financial difficulties but said he had no reason to get rid of the car because he was using it for work. He said he had lost his job since the vehicle was taken, affecting his ability to provide for his family and pay off the loan.  

In its dispute ruling, the Australian Financial Complaints Authority says the insurer’s investigation “was wholly unsatisfactory”.

It says Auto & General provided no evidence of a connection between the claimant and the thief, who was convicted of the crime.

“In fact, it made no attempt to draw any connection between them at all.”

It adds that the insurer has provided no valid reason why its locksmith could not inspect the vehicle, and it questions the explanation that the car could be accessed only with a key.  

“If it were not possible to steal the car unless a correctly encoded key was used, I expect the police enquiries would have focused on the complainant,” AFCA’s ombudsman said.  

“The arrest and prosecution of a reportedly experienced motor vehicle thief as the perpetrator implies theft without a correctly encoded key was possible and occurred.”  

AFCA says there is “no compelling evidence to show the complainant was complicit in the vehicle’s theft or disposal” or that he misled the insurer.

It finds no grounds for the claim to be considered fraudulent or denied.  

Auto & General must pay the claim, plus $2000 compensation for delays and stress caused by its allegations.  

AFCA says the insurer’s conduct raises serious concerns, noting it “did not provide clear and cogent evidence in support of its position and relied heavily on supposition. Moreover, it appears to have not pursued aspects of the matter which may have supported the complainant’s case.  

“The result meant the complainant’s settlement was denied and he has been unduly and unfairly delayed in receiving the settlement of his claim.”

See the ruling here.