Auto & General was following a customer’s instructions when it cancelled a comprehensive motor policy and replaced it with third-party property-only cover, the financial services ombudsman has found.

When the vehicle was later written off, the policyholder sought payment under the comprehensive policy and turned to the Australian Financial Complaints Authority after the insurer refused.

But the ombudsman finds she cancelled the comprehensive policy in April last year. Another driver, who was at fault and uninsured, then damaged her vehicle last November.

Auto & General declared the car a total loss and offered to settle under her policy’s uninsured motorist damage (UMD) benefit.

The market value of the vehicle was $44,685, but the maximum benefit under the UMD benefit was $5000.

The woman denied changing the policy and said she continued paying for comprehensive cover.

But the insurer supplied a webchat log showing the cancellation, plus a copy of cancellation notices and documents sent to her.

It also showed direct debits for third-party property-only cover were made.

The woman said she was hacked, but the ombudsman is satisfied she made the policy changes and Auto & General processed the claim correctly.

The insurer was also entitled to cancel the TPPO policy in February this year for non-payment, AFCA says.

Read the ruling here.