An elderly caravan owner has won a claim dispute after her insurer said she misrepresented pre-existing damage.

The woman lodged a claim with Zurich in February last year after the caravan rolled while being towed. 

A Zurich-appointed assessor declared the caravan a total loss, but the insurer declined the claim, saying it would not have offered cover had the woman's broker disclosed some previous damage. The two-decade-old caravan had been written off in February 2021 due to hail damage, and had also been declared a repairable write-off in 2020. 

The woman bought the caravan in January 2023 in a private sale. A register search showed it had been a repairable write-off, but the seller said it had been fully repaired. 

“The transport department in her state informed her the caravan would not be re-registered if the damage had not been rectified, which gave her confidence in purchasing,” a determination by the Australian Financial Complaints Authority says.  

“The complainant ... is of the understanding that once the caravan was re-registered, [the write-off] was not a concern because repairs needed to be completed to obtain a new roadworthy [rating].

“She does not consider she is at fault and believes she had done her due diligence by obtaining a completed roadworthy and gas compliance certificate, and successfully transferring the registration.”

AFCA says Zurich did not show the caravan’s condition was misrepresented at policy inception and it should settle the claim. It has also awarded $1500 compensation for stress caused by the denial.

The caravan owner did not disclose the previous write-off to her broker, who answered “no” to Zurich’s online application question: “Does the caravan have any pre-existing damage?” Selecting “yes” would have prompted a message stating underwriting guidelines prevented Zurich offering insurance to customers with a caravan registered as a write off.

AFCA says Zurich’s question was not sufficiently clear and had “potential to mislead and confuse consumers”.

“In the absence of a definition or listed example of pre-existing damage, it is not clear what sort of damage and how extensive it must be before it needs to be disclosed. Clarity regarding this point is important given the significant consequences for the complainant if not answered correctly,” the authority says.

There was “no clear way for the complainant to understand if the caravan was an unacceptable risk” because Zurich did not specifically ask whether the caravan was a write-off.

“If the intention was to exclude written-off caravans, this could and should have been specified when asking the question about pre-existing damage, or as an alternative question,” AFCA says.

Apart from minor wear and tear, there was no other damage to the caravan when the policy was bought. 

This was supported by Zurich’s initial crash assessment, which noted the caravan presented in good overall pre-loss condition, and the February 2024 damage was consistent with the towing accident.

“The complainant represented the condition of the caravan based on an honestly held belief ... I accept it was reasonable for her to have considered the caravan to be in good condition,” the ombudsman said.

“Zurich has not shown it had suitable grounds to rely upon to deny the claim. The decision was unreasonable in the circumstances.”

See the ruling here.