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Determination
Case number | 1022035 |
Financial firm | RACQ Insurance Limited |
Case number: 1022035 24 May 2024
The complainant held comprehensive motor vehicle insurance with the financial firm (insurer), covering his VW Kombi van (vehicle) for $150,000 as an agreed value. On 2 February 2023, he lodged a claim for theft of the vehicle on or about 10 February 2021.
The insurer denied the claim. It says the vehicle was not stolen. Rather, with the permission of the complainant, AS sold the vehicle in May 2021. The insurer accepts that AS did not pay the sale proceeds to the complainant and entered bankruptcy but says the policy does not cover theft of money and that the non-payment did not occur until the policy lapsed.
The complainant maintains that AS only had authority to repair the vehicle, but unlawfully took and sold it without his permission. He wants the insurer to accept the claim and compensate him for the stress and inconvenience its claim handling has caused him.
The complainant is represented by his insurance broker, MS. For ease of reference, the complainant and MS are referred to as ‘the complainant’ in this determination, unless context requires otherwise.
Yes. At all relevant times, AS had the complainant’s authority to possess and sell the vehicle. The sale took place, with the complainant’s knowledge and approval. While AS may have subsequently stolen the $125,000 sale proceeds, the policy does not cover theft of money. Further, any such theft took place after 13 May 2021, when the policy lapsed.
Yes. As the insurer has acknowledged, it’s claim handling unreasonably caused the complainant stress and inconvenience. The insurer is to pay him $1,000 in compensation.
The insurer’s claim denial is fair because the complainant has not established a claimable loss under the policy terms. However, it is fair that the insurer compensates the complainant for the stress and inconvenience it caused him.
This determination is substantially in favour of the insurer.
Within 14 days of receiving written notice the complainant accepts this determination, the insurer is to pay him $1,000 in non-financial loss compensation.
The insurer is otherwise not required to take any further action.
Yes. At all relevant times, AS had the complainant’s authority to possess and sell the vehicle. The sale took place, with the complainant’s knowledge and approval. While AS may have subsequently stolen the $125,000 sale proceeds, the policy does not cover theft of money. Further, any such theft took place after 13 May 2021, when the policy lapsed.
The complainant is required to show on the balance of probabilities (that it is more likely than not), that he suffered a claimable loss under the policy. This means he must show the loss was caused by a risk for which he is insured.
Subject to the terms and conditions set out in the product disclosure statement (PDS), the complainant’s policy covers accidental damage to and theft of the vehicle during the period of insurance. The relevant period of insurance is 13 May 2020 to 13 May 2021, following which the policy lapsed.
On 2 February 2023, the complainant lodged a theft claim with the insurer. He said the vehicle had been with TS, a motor repair business operated by AS, for repairs. He saw the vehicle at TS’s workshop on 10 February 2021, but when he returned in May, the workshop had been closed and the vehicle was gone. AS later sold the vehicle without his permission and did not pay him the sale proceeds before going into bankruptcy.
Once the complainant proves the existence of a claimable loss, the insurer is liable for the loss unless it shows an exclusion or limiting condition applies. The insurer has the onus of proving on the balance of probabilities the application of the exclusion or condition.
The complainant informed the insurer’s external investigator AU that:
he is an avid car collector
he purchased the vehicle on 12 January 2018 from AS
the vehicle was then left at TS’s workshop because AS would be overseeing its restoration
on 19 November 2019, he registered the vehicle as a historic vehicle
in April 2020, the vehicle was returned to him
as he was dissatisfied with the restoration, the vehicle was returned to AS
on 13 November 2020, he cancelled the historic vehicle registration
he saw the vehicle at TS’s workshop on 10 February 2021
when he returned to the workshop (seemingly, on 26 May 2021), he discovered it was closed and all the vehicles that had been in it, including his vehicle, had been removed
his attempts to contact AS were unsuccessful
he then spent a long time trying to locate the vehicle
on 25 January 2023, he reported the vehicle as having been stolen to the police.
The insurer refers to the complainant’s statement to the police dated 15 May 2023. It notes that the complainant said he had known AS since 2016 and had bought and sold approximately ten vehicles through AS prior to the vehicle. The complainant acknowledged that it took a long time for AS to pay him for the earlier transactions.
The insurer obtained from the complainant a copy of his text messages with AS between 21 September 2020 and 8 November 2021. These show:
with the complainant’s knowledge and consent, AS was trying to sell the vehicle from 21 September 2020
on 4 May 2021, AS told the complainant there was an offer at $125,000. The complainant responded ‘if it doesn’t go at that I have a guy interested at similar money’
AS then advised on 4 May 2021 a deposit had been paid and that the complainant would be paid ‘asap when we have settled’
on 11 May 2021, AS asked the complainant for his date of birth and license number for invoicing purposes. The complainant provided the requested information
between 12 and 19 May 2021, the complainant followed up payment several times
on 19 May 2021, AS told the complainant he had been advised the purchaser would be paying that day
on 25 May 2021, AS informed the complainant payment had been received, and the complainant would be paid
there were then ongoing texts between the complainant and AS about payment of the sales proceeds, which did not occur
the complainant and AS nevertheless continued to discuss commercial opportunities. For example, on 9 June 2021, the complainant asked if AS had a Spitfire Green GTSR manual available.
Through AU, the insurer has obtained a copy of an invoice AS issued on 26 May 2021 to the vehicle’s purchaser PL, a luxury car dealership. The invoiced amount is $120,000. It is unclear whether the $5,000 difference between that figure and the $125,000 purchase price reflects the deposit previously paid.
AS was made bankrupt on 3 March 2022. On 27 April 2023, AS’s bankruptcy administrator JS confirmed that AS had received $125,000 from PL for the vehicle. The complainant is listed as an unsecured creditor.
The insurer says the complainant has not established a claimable loss because:
the vehicle was not at any time stolen
to the extent AS stole the sale proceeds:
> that did not occur until after the policy lapsed on 13 May 2021, and
> in any event, the policy covers theft of the vehicle; it does not cover theft of money.
The complainant says:
he did not at any stage authorise AS to sell the vehicle
he did not sign any consignment paperwork or transfer the vehicle’s registration over
the insurer has been selective in referring to the text messages, and that AS was often lying to him
his intention at all times was to restore the vehicle and add it to his collection
the police accepted his report the vehicle had been stolen.
The complainant maintains that the vehicle was stolen by AS soon after 10 February 2021, which was during the policy period. He says that as the vehicle has not been recovered, the insurer should pay him the $150,000 agreed value.
Based on the exchanged information, the panel is satisfied that:
AS had the complainant’s authority to possess and sell the vehicle
with the complainant’s knowledge and approval, on 4 May 2021, AS reached an agreement to sell the vehicle for $125,000
other than a deposit paid on 4 May 2021 (possibly, $5,000), AS did not receive the sale proceeds until at least 19 May 2021
it was only after 19 May 2021 that AS failed to pay the $125,000 to the complainant.
The panel acknowledges that the complainant may have been the victim of a crime perpetrated by AS. However, for the reasons the insurer has identified, he has not established a claimable loss under the policy.
This means the insurer is entitled to deny the claim.
Yes. As the insurer has acknowledged, it’s claim handling unreasonably caused the complainant stress and inconvenience. The insurer is to pay him $1,000 in compensation.
AFCA can award compensation for poor claim handling
Under the AFCA Rules, we may award compensation (capped at $5,400) for non-financial loss where a complainant has suffered an unusual degree or extent of physical inconvenience, time taken to resolve the situation or interference with their expectation of enjoyment or peace of mind.
The complainant says the insurer handled his claim poorly. He refers to numerous delays, poor communication and errors. He says these issues and the insurer’s intrusive investigations have caused him considerable stress and inconvenience.
The insurer has acknowledged its management of the claim ‘may have resulted in interference with the complainant’s expectation of enjoyment or peace of mind’. It has apologised to him and offered $500 in compensation.
Having carefully reviewed the exchanged information, the panel is satisfied that the insurer did not at all times manage the claim in a manner consistent with the General Insurance Code of Practice. The panel accepts that the insurer’s claim handling unreasonably caused the complainant stress and inconvenience.
In the circumstances, the insurer is to pay the complainant $1,000 in non-financial loss compensation.
The insurer’s claim denial is fair because the complainant has not established a claimable loss under the policy terms. However, it is fair that the insurer compensates the complainant for the stress and inconvenience it caused him.
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
the legal principles
applicable industry codes or guidance
good industry practice
previous decisions of AFCA or its predecessor schemes (which are not binding).
The respective parties have completed a full exchange of the relevant information, and each party has had the opportunity to address any issues raised. We have reviewed and considered all the information the parties have provided.
While the parties have raised several issues in their submissions, we have restricted this determination to the issues that are relevant to the outcome.
Due to the nature of this complaint, we referred it to a panel for determination. The panel includes:
an ombudsman
a member with significant experience in consumer and small business advocacy
a member with extensive experience in the insurance industry.
AFCA is not a court of law. We do not have the power to take or test evidence on oath, or to require third parties to give evidence.
When we assess complaints, we consider:
available documents
the recollections of the parties
all relevant circumstances.
We give more weight to documents created at the time the events occurred. If there are no relevant documents, we will decide what most likely occurred based on the available information.
If there are conflicting recollections and these are evenly weighted, we may find that a claim cannot be established.
