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Determination
Case number | 12-00-1008200 |
Financial firm | RACQ Insurance Limited |
Case number: 12-00-1008200 19 August 2024
The complainant held comprehensive motor vehicle insurance with the financial firm (insurer) covering her 2017 Mercedes Benz wagon (vehicle). On 3 February 2022, she lodged a claim for damage to the vehicle and third party property due to two collisions on 4 February 2021. The complainant’s son, M, was the driver of the vehicle when the collisions occurred.
The insurer says M was under the influence of alcohol and over the 0.05% blood alcohol content (BAC) legal limit. The policy excludes damage incurred when the driver is in either of those states. The insurer denied the third party damage claim, but accepted the claim for the vehicle’s damage as the complainant could not have reasonably been aware of M’s condition.
The complainant maintains that the claim should be accepted in full. She says the insurer has not established either of the exclusions apply, noting a charge of driving while above the BAC limit was dismissed. She is also dissatisfied with the insurer’s claim handling and delays.
The complainant is represented by M.
Yes. The insurer has established it is more likely than not that M was under the influence of alcohol and over the BAC limit at the time of the collisions. Further, his being in those states can reasonably be regarded as being capable of causing or contributing to the collisions.
No. The insurer did not cause unreasonable delay or otherwise mishandle the claim. It was entitled to fully investigate the claim circumstances before making a coverage decision. Those investigations were extensive and therefore necessarily time consuming.
The insurer has established that the third party damage claim is excluded from cover. It would not be fair to require the insurer to accept that claim when the policy does not respond. As the insurer did not cause unreasonable delay or mishandle the claim, it would not be fair to require it to pay non-financial loss compensation.
This determination is in favour of the insurer.
The insurer is entitled to deny the third party damage claim. It is not required to take any further action.
Yes. The insurer has established it is more likely than not that M was under the influence of alcohol and over the BAC limit at the time of the collisions. Further, his being in those states can reasonably be regarded as being capable of causing or contributing to the collisions.
The complainant is required to show, on the balance of probabilities (that it is more likely than not), that she suffered a claimable loss under the policy. This means she must show the loss was caused by a risk for which she is insured.
Subject to the terms and conditions set out in the product disclosure statement (PDS), the policy covers:
The PDS defines ‘incident’ as ‘an event which [the policyholder] didn’t intend or expect’.
On 3 February 2022, the complainant notified the insurer that:
It is not in dispute that the first and second collisions occurred. There is no suggestion that either collision was intended or expected by the complainant. Accordingly, the panel is satisfied that she has established a claimable loss under the policy.
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 insurer is entitled to consider coverage for the damage to the vehicle and for legal liability separately under the policy terms and conditions.
The PDS sets out on page 66 that there is no cover under the policy for damage to an insured vehicle or for legal liability which is caused by or arises in connection with anyone in charge or control of the insured vehicle who:
However, if the policyholder did not know and could not reasonably have known the person in charge or control of the vehicle was affected in those ways, the insurer will cover the policyholder.
On 21 March 2022, the insurer’s employed investigator interviewed M. The insurer has provided a recording of the interview as well as a transcript. Notably, the complainant said:
The insurer has submitted CCTV footage from the house with the fence into which M collided. The footage shows the vehicle approaching the intersection at an angle, veering towards the left. The other car comes through the intersection from M’s left. After the other car passes in front of it, the vehicle straightens and accelerates into the fence. Several metres of the fence are destroyed, and the vehicle flips onto its nose then the driver’s side.
The ambulance service and police attended. The ambulance report noted that:
The police traffic report recorded that:
The insurer has also provided audio recordings from the body cam being worn by the attending police officer. The insurer says the officer is heard to say that M was:
A blood sample taken from M at 12.10am on 5 February 2021 while he was in hospital was tested. A certificate of analysis records that he had a 0.225% BAC.
M was charged with driving while under the influence of alcohol and with careless driving. M’s lawyer submitted there were chain of custody concerns in relation to the blood sample. The insurer says the police advised it that the first charge was not pressed as the relevant nurse did not want to get involved. M pleaded guilty to careless driving and was fined $1,400.
The insurer also says the attending police officer informed its investigator that his roadside breath device had been playing up. Further, that to his observation the taking of the blood sample and its subsequent handling all appeared to be in order.
The police court brief noted that it was M that drove through a red light at the intersection, not the other car. It was also noted that M had appeared to be affected by unknown substances, struggled to speak, and struggled to answer reasonable questions.
The insurer has provided reports dated 8 and 19 March 2023 by Professor EO, forensic medical expert. In summary, Professor EO concluded that:
Section 54 of the Insurance Contracts Act, 1984 (Cth) provides that an insurer may not rely on a policy section to refuse to pay a claim by reason of an act of the insured or another person that occurred after the contract was entered into, unless the act or could reasonably be regarded as capable of causing or contributing to the loss.
The insurer says that it is entitled to deny coverage for legal liability that may arise because of the collisions. It says M had been under the influence of alcohol and over the BAC legal limit, both of which can reasonably be regarded as being capable of causing or contributing to the collisions. It has referred to M a demand for $49,838.38 it received from the fence owner.
However, the insurer accepted the claim for damage to the vehicle as the complainant could not have reasonably been aware of M’s condition. It paid out the $90,000 sum insured.
The complainant has provided a letter dated 31 August 2023 from lawyer LQ to the insurer. LQ’s submissions included that:
In a letter dated 15 November 2023 addressed to AFCA LQ submitted that:
[Insurer] have placed too much evidentiary weight on the blood analysis certificate. As stated in our letter to [insurer] dated 28 August 2023, the blood analysis certificate cannot be held to be evidence as it was not presented in Court as evidence, further the certificate could not be proven to be the blood alcohol result of [M]. There is no record or evidence to show that the blood taken from [M] was received by the laboratory for testing
Based on the exchanged information, the panel is satisfied that the insurer has established it is more likely than not that M was under the influence of alcohol and over the BAC limit at the time of the collisions. Further, his being in those states can reasonably be regarded as being capable of causing or contributing to the collisions. This is because:
The insurer is therefore entitled to deny coverage for the legal liability claim.
No. The insurer did not cause unreasonable delay or otherwise mishandle the claim. It was entitled to fully investigate the claim circumstances before making a coverage decision. Those investigations were extensive and therefore necessarily time consuming.
Under paragraph D.3.3 of the AFCA Rules, we may award compensation for non-financial loss (capped at $5,400) where the insurer’s actions have caused an unusual amount of physical inconvenience, time taken to resolve the situation, interference with the complainant’s expectation of enjoyment or peace of mind.
The complainant says the insurer caused delays and wrongly denied the legal liability claim.
While the collisions occurred over three years ago, the complainant did not lodge the claim until a year later. Given the collisions’ circumstances and the seriousness of the damage involved, it was reasonable for the insurer to undertake extensive investigations before making a coverage decision. The nature of the investigations meant they necessarily took time.
Accordingly, and noting the finding the insurer is entitled to deny the legal liability claim, the panel is not satisfied that the insurer should pay non-financial loss compensation.
The insurer has established that the third party damage claim is excluded from cover. It would not be fair to require the insurer to accept that claim when the policy does not respond. As the insurer did not cause unreasonable delay or mishandle the claim, it would not be fair to require it to pay non-financial loss compensation.
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.
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:
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.
