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Determination
Case number | 1046233 |
Financial firm | AAI Limited |
Case number: 1046233 17 May 2024
This complaint relates to a claim under a comprehensive motor vehicle insurance policy (policy) held by the complainants with the financial firm (insurer) in Victoria.
The policy was an agreed value policy for the complainants’ 2015 Jeep Grand Cherokee from 3 November 2022 to 3 November 2023.
The complainants made a claim under the policy on 2 October 2023 for the theft of the car on 2 October 2023.
The insurer declined the claim on the basis the theft was due to the car being left unattended, unlocked and with the keys left in the car.
Has the insurer correctly assessed the claim?
Yes. Based on the exchanged material and the terms and conditions of the policy, the insurer was entitled to decline the claim as the claim was excluded under the policy.
Why is the outcome fair?
The outcome is fair because the parties are bound by the terms and conditions of the policy. The insurer is entitled to rely on the terms and conditions of the policy. It would be unfair in these circumstances to require the insurer to meet the claim.
This determination is in favour of the insurer.
The insurer is entitled to deny the claim and is not required to take any further action.
Yes. Based on the exchanged material and the terms and conditions of the policy, the insurer was entitled to decline the claim as the claim was excluded under the policy.
Coverage of the policy
The complainants’ policy provides cover for loss or damage caused by an insured event during the period of insurance.
The coverage provided by the policy is subject to conditions, limitations, and exclusions. This means that not all loss and damage is automatically covered. Rather, only loss and damage caused by an insured event, during the period of insurance and subject to the conditions, limitations and exclusions, is covered.
The full details of the policy coverage, conditions, limitations, and exclusions are contained within the Product Disclosure Statement (PDS) and Certificate of Insurance (COI).
Based on the information, I am satisfied that the PDS and COI have been provided to the complainants. Therefore, the insurer is entitled to rely upon the terms of the policy, including its conditions, limitations, and exclusions, to determine its obligations to the complainants.
Complainants have initial onus to establish a valid claim
It is accepted insurance law that the initial onus is with the complainants to establish on the balance of probabilities (that is more likely than not) that the loss or damage claimed falls within the insuring provision of the policy. This is known as a valid (or prima facie) claim.
Once the complainants have established a valid claim, the onus shifts to the insurer to establish, on balance, the application of a policy exclusion or that it is otherwise entitled to decline the claim under the policy.
The policy is an ‘insured events’ policy. This means not all loss and damage is automatically covered. Rather, only loss or damage caused by one or more of the insured events, and not subject to exclusions, is covered. Under the policy, theft was an insured event (subject to the terms of the policy).
Therefore, to establish a valid claim, the available information must show that the claim fell within one of the insured events in accordance with the policy.
If a valid claim is established, the insurer has the onus of establishing, on the balance of probabilities, the application of any exclusion it relies on to reduce its liability.
The policy provided cover for theft (page 26):
The policy provided that the complainants had responsibilities to take steps to prevent loss or damage (page 11):
Your responsibilities
- take steps to prevent loss or damage, for example
o do not leave car keys in the car while your car is unattended or not secure
..
Not meeting your responsibilities
Your policy may not provide cover if you have not met your responsibilities and it may lead us to reduce or refuse to pay your claim and/or cancel your policy.
The policy provided in Section 3 an exclusion for loss caused by or involving an unattended car (page 21):
You are not covered under any section of this policy for damage, loss, cost or legal liability that is caused by or arises from or involves:
..
Unattended car
theft or damage to your car if the car is left unattended, unlocked and with the keys left in the car.
The expression ‘unattended’ was defined in the policy (page 74):
Unattended means you are not capable of keeping your car under observation or observed an attempt to interfere with it.
The complainants said in their complaint that on 2 October 2023 their car was stolen from their home when they ‘made a human error and left keys in the car’. The Victorian Police Report dated 3 November 2023 also recorded that:
In the investigation of the claim by the insurer, the male complainant, J, was interviewed by the insurer’s representative, I, on 27 October 2023. The interview record of the circumstances of the theft was as follows:
J | So I got home, I was only going to stay home for five, ten minutes, cause I was going to go to Costco. It's my son's birthday coming up, as I said earlier. And I was going to buy him a new basketball ring. So, our basketball ring down at the beach house is broken. So I got home, I measured up the backboard, just to see whether it was cheaper to buy a piece of Perspex. Came inside, went to the loo and came out here, and I rang this Perspex place in regard to buying a piece of Perspex. I forget how much they said it was, but it was somewhere in [suburb] I rang. And from there I fluffed around, I was doing a few things around the house, and then I was literally hanging some clothes out, and I heard my car start. |
I | So, how long do you reckon you, since you exited the car? |
J | I was roughly home about an hour. |
I | And you just recognised your engine. |
J | Oh look, when you hear a 6.4 Hemi start. And like I know, obviously I hear [female complainant’s car] startup. I just know the sound of my car and I just straight away thought that sounds like my car. |
I | Yeah. And so what did you do? |
J | I bolted through that door, through the front door and literally as I've got outside, as when I say bolted as fast as I could with my leg. I've got out the front and I literally just watched it storm up the road. |
The complainants made a claim under the policy for the theft of the car on 2 October 2013. The alleged thief was arrested on 13 October 2023.
The insurer denied the claim on 5 December 2023 on the basis that:
The complainants’ claim was denied by the insurer within approximately two months of the claim being made. The time taken to investigate and decline the claim was reasonable and in accordance with the four month period under the General Insurance Code of Practice.
Based on the information provided, the loss occurred when the car was left unattended, unlocked and the keys left in it. This falls within the exclusion for damage or loss involving an unattended car. Accordingly, it was entitled to deny the claim.
I have also given consideration to whether section 54 of the Insurance Contracts Act 1984 (Cth) assists the complainants. Broadly speaking, section 54 says an insurer cannot refuse a claim in whole or in part by reason of some “act” (which includes an omission) that occurs after the contract of insurance was entered into unless it can show:
The act here would be the complainant leaving the vehicle unattended, unlocked and with the keys left in the vehicle.
I accept this act could reasonably be regarded as being capable of causing or contributing to the loss. Further, the complainants have not shown that no part of the loss giving rise to the claim was caused by this act (as required under subsections 3 and 4). Accordingly, section 54 does not assist the complainants and the insurer is entitled to decline the claim.
The outcome is fair because the parties are bound by the terms and conditions of the policy. The insurer is entitled to rely on the terms and conditions of the policy to deny the claim. It would be unfair in these circumstances to require the insurer to meet the claim.
AFCA’s approach is based on fairness
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
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 of the information the parties have provided.
While the parties have raised a number of issues in their submissions, we have restricted this determination to the issues that are relevant to the outcome.
We assess complaints on available information and circumstances
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:
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.
