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Determination
Case number | 12-00-1066093 |
Financial firm | Auto & General Services Pty Ltd |
Case number: 12-00-1066093 22 August 2024
During the night of 11 January 2024, the complainant’s Porshe Macan motor car was stolen from her garage. It was recovered by the police the next day but had exterior and interior damage. The financial firm (the insurer) denied liability for that damage because the keys were in the car at the time of the theft, bringing the claim within an exclusion in the complainant’s insurance policy with it.
The complainant seeks cover for the loss and separately seeks to hold the insurer liable for damage done to the car’s paintwork by bat droppings whilst it was in the care of the insurer’s assessor.
No, the complainant breached the conditions of cover by leaving the key in the car. That act increased the risk of theft. The insurer is thus entitled to deny the claim.
Yes, additional damage to the car occurred whilst it was in the care of the insurer’s agents and was reasonably avoidable. The insurer is liable for that damage.
Leaving the key in the vehicle whilst unattended was a breach of the conditions of cover and increased the risk of theft. It is fair that the insurer be able to deny the claim because the conditions were breached. It is also fair that the insurer be liable for reasonably avoidable damage done to the car whilst in its agent’s care.
This determination is substantially in favour of the insurer. Within 14 days of being notified of the complainant’s acceptance of this determination, the insurer is to pay the claimant the sum of $4,908 plus interest on that amount, at the statutory rate under the Insurance Contracts Act 1984 (Cth), from the date of the claim denial to the date of payment.
No, the complainant breached the conditions of cover by leaving the key in the car. That act increased the risk of theft. The insurer is thus entitled to deny the claim.
It is established insurance law that an insured must first establish, on the balance of probabilities (that is more likely than not), that the loss or damage claimed falls within the terms of the policy. If that is done, the burden then shifts to the insurer to establish, again on the balance of probabilities, the application of any exclusion in the policy should they want to deny the claim.
The policy provides cover for theft and/or accidental damage to the car. However, the policy also sets out conditions of cover (on page 14). It states that a claim may be refused or reduced if any of these conditions are not met. In this case the relevant condition relied upon by the insurer is:
Conditions of Cover
You must ensure that:
[…]
you or the person in charge or control of the car, lock the car, activate any required security devices and remove all keys from within, on, or in the immediate vicinity of the car when it is left unattended for any period of time
It is not in dispute that the car was stolen and thus that the damage caused during that event is covered by the policy. However, the insurer denies liability on the basis the condition was breached, and, in particular, that the keys were left inside the car. On this issue the burden of proof is on the insurer.
The condition only applies if the car was left unattended. The complainant says the car was left in a locked garage well within the boundaries of her property. She also says she thinks she locked the car and thus it was safe and should not be considered unattended.
The policy does not set out a definition of the term ‘unattended’. The courts say something is ‘attended’, if someone:
The test does not require a person to be always directly watching the car. They must be in a position to observe any attempt to interfere with it. It also requires the person to have a reasonable prospect of preventing any unlawful interference.
The car was taken sometime during the night when the complainant and her family were inside their house. No one observed the theft. Thus, there was no one in a position to watch over the car or prevent theft. This is true even acknowledging the measure of security provided by the locked garage.
The complainant also left a set of keys in the car, albeit concealed in a small bag.
On balance, I accept at the time of the theft the car was unattended, with the keys in the car. This meant the complainant was in breach of the policy condition.
The policy provides that where the conditions of cover are breached it may refuse or reduce a claim. In this case it has chosen to refuse the claim.
Section 54 of the Insurance Contracts Act 1984 (Cth) (Act) has the effect of placing limits on the ability of an insurer to deny or reduce payment on a claim because the insured person has breached a condition of the policy. 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 that occurred in this case is the leaving of the keys in the unattended car. Applying the test in the second of the two dot points above, the keys being left in her unattended car meant the car could be stolen more easily than if they were not left in the car. This is true despite the measure of security provided by the locked garage and even if the car itself was locked. Therefore, the act could reasonably be regarded as being capable of causing or contributing to the loss.
I am satisfied section 54 of the Act does not assist the complainant and the insurer is entitled to deny the claim because of the breach of the conditions of cover.
Yes, additional damage to the car occurred whilst it was in the care of the insurer’s agents and it was reasonably avoidable. The insurer is liable for that damage.
The complainant has provided:
In response the insurer says it is not responsible for repairing the damage caused by bat droppings to the car, stating it is only:
responsible to return the vehicle to [its] pre-accident condition or pay the value of the vehicle once a claim has been accepted. As this claim has been rejected and cover has been cancelled, the [insurer] maintains this cost cannot be covered under the policy.
The insurer acknowledges that vehicles are often stored outside but says that it did not take an excessive time in dealing with the claim and returning the vehicle. The insurer has not engaged with the complainant’s evidence or provided evidence or expert opinion itself.
Based on the evidence provided by the complainant and in the absence of any evidence or opinion to the contrary, I accept that:
I accept that the insurer did not take an unreasonable time to handle the claim and return the vehicle. The insurer says it became aware of the location of the vehicle on 15 January 2024. Then, or soon after, it had the car towed to its assessor as its investigation of the claim continued. It says it returned the car to the claimant, by having it towed to the claimant’s repairer, on 5 February 2024. The insurer needed to investigate the claim and did not take an unreasonable time to do so. There has been no mishandling of the claim.
However, the evidence is that during that time, bat droppings remained on the vehicle and dried in the sun and caused damage. It was early January and so the height of summer.
It is unclear when the bat droppings got onto the car. I accept the complainant’s photographic evidence that they were not there when the road camera photographed the car during the theft. The insurer’s claim file notes for 23 January note a call from the assessor. The assessor says the assessment is underway. The assessor also told the insurer that the bonnet of the vehicle was covered in bat droppings and that it appeared to have been parked outside. This suggests the assessor did not think the droppings had got on the car whilst in the yard but earlier. I consider the droppings most likely got onto the car before it was found by the police or whilst in the custody of the police.
However at least by 23 January the assessor and the insurer were aware of the droppings on the car. The evidence of the complainant’s repairer is that the droppings caused damage because the were left on the car too long and dried out. Most of the time the droppings were on the car, the car was in the care of the assessor. The assessor could have cleaned the droppings off but did not do so.
Based on the exchanged material and on the balance of probabilities I find that the damage could have been avoided if during the period the car was in the assessor’s care and before it was returned to the complainant on 6 February, the bat droppings had been washed off. The damage was reasonably avoidable.
I do not accept the insurer’s position that just because the claim has been rejected it is not liable for the cost. The car was in the custody of the insurer and its agents. During that time damage occurred. That damage was reasonably avoidable. The damage having occurred whilst the car was in the care of the insurer’s agent, the insurer is liable for it.
The complainant has provided a quote covering both the repair of the car and a respray. The respray quote was for $4,908. I noted that if the respray were to be done by itself, without the other repairs, it might cost more.
There are two points to note in response to that. First, it seems unlikely that the complainant would proceed to have the respray done without the other cosmetic repairs to the vehicle. The insurer is not liable for the cosmetic repairs.
Second, if the bat dropping damage had not been done, there would have had to some more limited re-painting of the car, but not a full respray. Given this, and in the absence of further evidence, I am of the view the insurer is liable to compensate the complainant the quoted amount of $4,908. This is a fair outcome in the circumstances.
The complainant has suffered an unfortunate loss with her car stolen despite being kept in a locked garage on her property. However, the cover provided by the insurer has conditions, one of which had been breached. The condition, that the keys not be left in the car, is an understandable one, given the additional risk leaving the key in the car raises. It is a common condition in car insurance. It is fair that the insurer be able to rely on its conditions of cover to deny the claim. It is also fair that the insurer is liable for additional, avoidable damage to the car whilst it was in the care of its agents.
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 the information the parties have provided.
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.
