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Determination
Case number | 12-00-1047709 |
Financial firm | Allianz Australia Insurance Limited |
Case number: 12-00-1047709 26 June 2024
The complainant held a home and contents insurance policy with the financial firm (insurer). On 27 October 2023, the complainant lodged a complaint in relation to the loss of a watch as a result of a scam.
The insurer declined the claim on the basis that neither the theft nor accidental damage covers in the policy respond to the claim. Rather, the insurer says the complainant suffered a loss of sale proceeds through deceit and his policy does not provide cover him for scams.
The complainant disagrees and seeks that the insurer reimburse him for the value of the watch, being $7,000 as listed on the policy schedule.
No. The complainant has established a claimable loss under the policy for theft. The insurer is required to cover the claim and pay the complainant $2,400, being the replacement cost of the watch less the policy excess for portable contents.
The outcome is fair because the terms, conditions and exclusions of the insurance policy have been correctly applied to determine the extent of coverage. As theft is covered under the policy, it is fair that the insurer pays the claim on the basis outlined in the determination.
This determination is in favour of the complainant.
Within 14 days of being notified of the complainant’s acceptance of this determination, the insurer is required to pay the complainant $2,400.
No. The complainant has established a claimable loss under the policy for theft. The insurer is required to cover the claim and pay the complainant $2,400, being the replacement cost of the watch less the policy excess for portable contents.
The complainant is required to show, on the balance of probabilities (that it is more likely than not), that there is a claimable loss under the policy. This means the complainant must prove the loss or damage was caused by a risk that is covered under the policy.
Once the complainant proves there is 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, that the exclusion or condition applies.
The insurer’s policy consists of the policy schedule and product disclosure statement (PDS). It is not in dispute the insurer provided the policy documents to the complainant.
The policy covers accidental loss or damage. The PDS defines accidental damage as ‘damage caused by sudden, unforeseen and unintended events’.
The complainant also took out the optional portable contents cover for the watch. The portable contents cover states:
Portable contents are items designed to leave your insured address with you… If you choose this option, we’ll cover you for loss or damage to your portable contents caused by theft or an accident at the insured address and anywhere in the world.
The policy otherwise generally excludes cover for ‘anything not directly related to one of the insured events…or events specifically covered by [an optional cover]’, such as the portable contents cover.
The police report states that:
The complainant says the loss occurred due to theft because the offender was never a genuine third party and there is clear evidence it was never going to be a legitimate sale. If he had sold the watch to a legitimate third party who then failed to pay, it would satisfy the insurer’s ‘sale proceeds’ argument. However, the offender never intended to pay. He therefore argues this is a theft by deception, which he says is confirmed by the police report.
The complainant says he is a victim of the offence of theft by deception and, as such, the policy should cover him for this loss. There is also nothing in the policy which says this form of theft is not covered.
The insurer says the loss of the watch was not due to theft or burglary or any other insured event. It says the complainant gave the watch to the third party, albeit conditionally. Therefore, the circumstances cannot be described as theft.
The insurer also does not consider the accidental damage cover responds as the circumstances do not align with the definition in the policy. The commercial intent of this section of the policy is to provide cover for loss or damage occurring accidentally. That is, where a content item is accidentally damaged or lost.
The circumstances of the claim relate to a sale transaction of the watch in which the complainant has been the victim of a deception. The claim is for loss of sale proceeds, which is a civil issue between the complainant and the third party. Therefore, it does not constitute accidental damage. This cover does not extend to civil matters such as this where the planned sale of an item went awry.
Alternatively, if AFAC determines that there has been a theft or burglary, the insurer says the policy limit for theft of money, being $2,000, should apply.
The onus is on the complainant, in the first instance, to establish that the loss suffered is covered under the policy.
‘Theft’ is defined in the policy as ‘Theft without forcible entry’. As the term itself is not expressly defined, it should be given its ordinary meaning. The Macquarie Dictionary defines ‘theft’ as ‘the act of stealing; the wrongful taking and carrying away of the personal goods of another; larceny.’ The dictionary also defines ‘steal’ as ‘to take or take away dishonestly or wrongfully, especially secretly’.
Further, in the case of Lockwood & Lockwood v Insurance Australia Limited (trading as SGIC Insurance) [2010] SASC 140 (Lockwood case), the Court considered the issue of how theft should be defined and interpreted within an insurance context. Relevant to this, the Court said that ‘the indemnity for theft extends to any dishonest taking of the insured vehicle which materially interferes with the owner’s proprietary interest in it’.
The exchanged information shows the complainant was tricked into entering into the transaction. That is, the third party failed to uphold its end of the bargain and pay the purchase price of the watch. In particular, I accept the information shows the third party never intended to purchase the watch given the nature of the transaction.
I accept the insurer’s argument that the loss arises from a breach of contract and, specifically, from the third party’s failure to pay the purchase price. However, I consider there is still a theft. This is because the information shows the third party dishonestly and wrongfully obtained the item and this materially interfered with the complainant’s proprietary interest in it.
Therefore, there has been a theft of a portable contents item listed on the policy.
The complainant is seeking reimbursement of the insured value of the watch, being $7,000. The policy says that when settling claiming for contents and portable contents items, the insurer may:
The policy also states that the insurer considers ‘the reasonable cost of repair or replacement to be the retail price of the item as if it were new. [The insurer] will not pay the extra cost of purchasing an extended warranty on any item’.
Based on the above, the complainant is entitled to be reimbursed the retail price of the item as if it were new up to the sum insured. That means, the sum insured is likely only payable if the cost of replacement matches or exceeds the sum insured. Otherwise, if the replacement cost is less than the sum insured, then the insurer is entitled to limit its liability to that amount.
Neither party has provided any evidence of the retail price of the item or its replacement cost.
However, the information shows the complainant agreed to privately sell the watch to the third party for $2,500. Therefore, this shows the complainant has valued the watch in the marketplace at $2,500. Further, there is no information to show the complainant sought to sell the watch for significantly below its retail value or that its value was significantly below that of a new version.
Therefore, given these particular circumstances, I consider it fair to assess the cost of replacement as $2,500.
The excess for portable contents items is $100. I consider this is the applicable excess since I am satisfied there has been a theft of a portable contents item.
Therefore, on balance, I consider the insurer is required to pay the complainant $2,400.
The outcome is fair because the terms, conditions and exclusions of the insurance policy have been correctly applied to determine the extent of coverage. As theft is covered under the policy, it is fair that the insurer pays the claim on the basis outlined in the determination.
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.
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.
