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Determination
Case number | 1010529 |
Financial firm | Zurich Australian Insurance Limited |
Case number: 1010529 25 June 2024
The complainant holds a motor insurance policy with the financial firm (the insurer) for a 2021 Dodge Ram (the vehicle). On 28 December 2022, the complainant lodged a claim for damage to the insured vehicle following an incident which occurred while it was being driven that day on sand dunes in South Australia.
The insurer has denied the claim. The insurer says that the complainant has not established an accident as defined in the Product Disclosure Statement (PDS). Further, if an accident were to be established, the insurer says that the complainant did not take all reasonable precautions to prevent the accident in breach of the policy terms and, in the circumstances, that the insurer is able to reduce its liability to nil.
The complainant disagrees with the insurer’s claims decision and wants the claim accepted. The complainant also seeks reimbursement of professional costs.
A broker represents the complainant and its sole director, SC. Reference to the complainant also includes reference to the company, the director and the broker unless context directs otherwise.
No. I am satisfied that the complainant has established a claimable loss. I am not satisfied that the insurer has established that the complainant has breached the policy terms that would enable it to deny the claim.
Yes. The insurer is to reimburse the complainant for the costs of the complainant’s expert AN.
No. The information does not show that the insurer’s position was unreasonable.
The outcome is fair in all the circumstances because the complainant has established a valid claim for an incident covered under the terms of the policy. The insurer has not established that the complainant has breached a policy condition that would allow it to reduce its liability on the claim to nil. It is also fair that the insurer reimburses the complainant for its professional costs.
This determination is in favour of the complainant.
Within 28 days of receiving notice the complainant accepts the determination, the insurer should accept and settle the claim in accordance with the policy.
The insurer is to reimburse the complainant the costs of AN’s report (capped at $5,000) after the complainant provides the insurer with a copy of the invoice, together with evidence of its payments within 14 days of receipt of same. The insurer is to pay interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) from the date of payment of AN’s invoice, to the date of payment to the complainant.
No. I am satisfied that the complainant has established a claimable loss. I am not satisfied that the insurer has established that the complainant has breached the policy terns that would enable it to deny the claim.
The complainant is required to show, on the balance of probabilities (that is more likely than not), that it suffered a claimable loss under the policy. This means that it must show the loss was caused by a risk for which it is insured.
Once the complainant, on balance, establishes 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 balance, the application of the exclusion or condition.
The Certificate of Insurance (COI) confirms that the complainant holds comprehensive insurance for the insured vehicle. The Product Disclosure Statement (PDS) says that this provides cover for physical loss, damage or destruction to the vehicle as a result of an accident.
Accident is defined on page 13 of the PDS as an unforeseen or unintended happening. Accidental Damage is defined as sudden physical loss, damage or destruction to the vehicle caused by an accident.
The complainant says that SC was driving the vehicle on a sandy beach and was travelling about 60 kilometres an hour when he went up a sand dune and then ‘failed the front drop’. The complainant believes that this was because of the weight of the vehicle. SC says that the vehicle hit the ground front first and then rolled to the driver’s side.
The insurer has engaged experts to support its position that it says that the incident is not consistent with an accident. The insurer also relies on the complainant’s version of the incident provided to the insurer’s investigator, B on 30 January 2023 wherein the complainant says that a sand dune collapsed under the weight of the vehicle.
The insurer says that it has engaged two independent experts (AAE and DV) who have provided their opinion based on objective data. The insurer says these reports, together with the witnesses’ statements and reports from the complainant’s own expert do not support the complainant’s version of events.
Consequently, the insurer says that there is no evidentiary basis under which it can be satisfied that there was an event giving rise to cover under the policy.
The insurer relies on the South Australian Police Shield Vehicle Collision Report dated 27 February 2023. It provides:
U1 VIC REGO Txxx driving in sand dunes areas off of LG Rd, B, U1 travelling in unkn [sic] speed approx. 80km/h (stated by driver) hit ramp of a sand dune and vehicle launched into air and approximately 30 mtr length and 10 metrs down, nose diving into the bottom of the sand dune causing vehicle to flip. 3 occupants including 1 injured.
The insurer also refers to the Occurrence Enquiry Log for a South Australian Police Shield Collision Report dated 28 December 2022 which says:
OCC report taken- attended the vehicle accident scene and took photographs of the accident scene. The vehicle VIC rego Txxx appeared to have been travelling at speed and launched off of a sand dune with either inattention by the driver of due care. The driver stated to police he was travelling at abou [sic] 80km/s, the scene would suggest that he was travelling between 80 and 100 km/h with the distance and damage that had been done to the vehicle. Vehicle has launched 30 mtrs in distance before the nose of the vehicle hit the ground first and travelled apprx 10mtrs down from the top of the dune to the bottom. The nose of the vehicle has created a large whole [sic] in the ground and several partys [sic] of the front end where [sic] buried deep. The vehicle has unrepairable damage and required a full lift or tow via heavy machinery at the owners cost. It is believed that the driver/owner was travelling too fast and not having effective control of the vehicle. Photos of the scene attached to the OCC and the after photos once the vehicle had been extracted. The vehicle suffered severe damage from looters. TIN issued to the driver for failing to maintain proper control. The report was taken approx. 6-7 hours after the accident. Taken to M hospital with potential spinal damage.
The insurer engaged AAE to provide a report commenting on whether the complainant’s version of events is consistent with the evidence.
AAE inspected the vehicle and obtained the data from the Event Data Recorder (EDR). AAE also undertook a site inspection, although noted that it was not possible to locate the collision site as the nature of the sand dunes being that they are ever changing.
The insurer also appointed DV to provide a report. DV reviewed the complainant’s expert report (AN) and the EDR to provide its opinion as to the circumstances of the incident.
Based on the information, AAE and DV concluded that:
The insurer says that the damage was caused by the complainant launching the vehicle off the sand dunes at excessive speeds. The insurer says that this is not an unforeseen or unintended happening as defined in the policy.
The insurer also says that the circumstances of the loss as described by AAE and DV is consistent with the police statements.
The complainant denies intentionally causing any damage to the insured vehicle.
In support of its position, the complainant engaged AN to provide a report.
AN obtained statements from the two other passengers in the vehicle (TG and NH) when the incident occurred. Both witnesses say that the complainant was not speeding or driving recklessly at the time of the incident. While both TG and NH have provided statements which are remarkedly identical, both statements have been signed and adopted as a truthful account by them. NH’s statement also appears consistent with the statement obtained by B on behalf of the insurer on 2 March 2023.
NH says that he has been to Beachport sand dunes several times and did not consider that the complainant was driving dangerously. He also said the crest of the sand dune appeared suddenly and the vehicle went down the other side. He says that neither he or the complainant anticipated how steep the other side of the dune was. NH says that the incident was an accident.
TG also says that she believed that the complainant was not speeding or driving recklessly.
AN says that while the insurer’s experts say the complainant was speeding, this is not consistent with the witness accounts from NH and TG. Further, AN says that although the CDR can capture the data, it does not necessarily reflect the actual speed as neither DV or AAE have accounted for the wheels spinning without traction. AN is critical that DV has also not accounted for the weight of the vehicle when forming its opinions.
The complainant says that the TikTok videos provided by the insurer and the comments noted on social media are not reliable and no weight should be placed on them.
The insurer has placed great weight on the description given by the complainant of the sand dune collapsing under the weight of the vehicle. However, the complainant describes in the interview with B that:
obviously it’s that windy that the mountain gets- it cuts out (A265)
and that
he failed the front drop (A266).
He describes:
[w]ent up. And, I just felt the front just drop (A269).
Further:
Q594 Yeah. So, what do you think was the main cause of the accident?
A594 The weight of the vehicle. Going over. And, obviously it was that windy and sandy. And, the top’s collapsed. I think they call it like, a razor. Razorback or something.
AAE’s attendance at the site of the incident and photos show the existence of a ‘razorback’ sand dune which is characterised by a smooth uphill incline.
While AAE and DV show that the complainant was accelerating and became airborne, I am satisfied that this is consistent with the complainant’s, NH and TG’s description that the crest of the sand dune took them by surprise and that they had not anticipated it. There is no information to suggest that complainant was aware of the other side of the incline being as it was.
The crash support data also confirms that the complainant applied the brakes 2.1 seconds before the impact. This suggests that the complainant was unaware of the other side of the crest of the sand dune.
The complainant reported travelling at no more than 60kms/hr. This was consistent with the reported speed by NH and TG. DV also reported the same speed. This speed, as noted by AN, is within the sign posted speed limits.
I am satisfied in the circumstances that the incident was unforeseen and unintended and therefore is a claimable loss under the terms of the policy.
The insurer says that if it were to be established that an accident occurred, the insurer seeks to rely on the General Condition 15.10 of the policy. That is, the complainant failed to take all reasonable precautions to prevent injury, loss or damage to the insured vehicle and the insurer is entitled to reduce its liability under the policy to nil.
Page 39 of the PDS provides:
15.10 Prevention of loss or damage
We may not pay Your claim if You do not take all reasonable precautions to prevent injury, loss or Damage, including securing Your Vehicle against unauthorised entry when it is unattended. This includes removing Your keys and locking Your Vehicle.
It is a condition of the Policy that Your Vehicle be kept in good repair.
The insurer says that if the complainant was driving over a sand dune with the accelerator fully depressed without knowing the slope and depth of the sand dune on the other side of the crest, then the complainant did not take reasonable precautions. The insurer says that while the extent of damage to the vehicle may have been unintended, the act of launching the vehicle was intentional and otherwise reckless, and therefore in breach of condition 15.10 of the PDS.
The courts have provided guidance on exclusions requiring an insured to take reasonable care or use of reasonable precautions. The insurer must establish that the complainant was aware of a potential damage and ‘courted the danger’ by failing to take measure to avoid it. This is a subjective test to be evaluated through the eyes of the complainant. It requires more than simply negligence or ignorance of risk. The insurer must show that the actions of the complainant were so reckless as to demonstrate a lack of care.
The insurer says that the actions taken by the complainant were a failure as:
The insurer had relied on an infringement notice issued to the complainant by SA Police for the offence of ‘Drive Vehicle Without Having Proper Control’. However, the complainant advised that this infringement notice was subsequently discontinued. I therefore place little weight on this issue.
In the complainant’s interview with B, SC denies driving the vehicle for a challenge, saying that he wouldn’t use this vehicle, a $300 thousand vehicle (A205-208).
SC also confirms that he did not actively turn off the stability control, rather the vehicle does it automatically (A251).
The information shows that the complainant applied the brakes when the vehicle was airborne.
Having considered all available information, I am not satisfied the insurer has established the complainant failed to take all reasonable precautions to protect the vehicle against loss or damage.
The complainant was driving the vehicle up an incline of a sand bank. While SC says that he had previously driven on the sand, he was unfamiliar to the area and to the vehicle when driving in these conditions. I am satisfied that the complainant had the accelerator depressed to travel up the incline and not for the purposes of launching the vehicle over the top of the crest.
I am satisfied that the complainant held a reasonable belief that the top of the sand dune would be flatter. The complainant did not foresee that he would become airborne and that the vehicle would nose dive into the sand, resulting in the damage. Being unaware of the danger is not a failure to take reasonable precautions.
The incident occurred as the complainant had miscalculated the incline. I accept that this was a genuine mistake and it cannot be said that SC courted the risk of damage to the vehicle. The fact that SC applied the brakes is suggestive that he was taking reasonable precautions to avoid damage.
It follows that the general condition 15.10 on page 39 does not apply and the insurer is required to settle the claim for damage to the vehicle in accordance with the terms and conditions of the policy.
The complainant says that the insurer has breached its duty of utmost good faith towards it in how it reached its decision.
The insurer says that it has investigated the claim with due diligence and provided the complainant with procedural fairness, giving it an opportunity of responding to information that it was relying upon.
Having reviewed the information, including files notes, I am satisfied that the insurer has acted in good faith in all its dealings with the complainant. The insurer was not obliged to obtain witnesses statements, especially in circumstances where the complainant bears the onus of proof in establishing its claimable loss.
Yes. The insurer is to reimburse the complainant for the costs of the complainant’s expert AN.
The AFCA Rules enable AFCA to require an insurer to contribute to the professional costs incurred by the complainant. These costs are, however, usually capped at a total of $5,000, unless special circumstances apply.
When considering whether to require an insurer to make a costs contribution, AFCA takes into account the complexity of the complaint and whether the particular complainant needed to incur costs to understand or establish their claim.
The complainant engaged AN to provide a report to assist following the insurer’s denial of the claim. AN interviewed and obtained statements from TG and NH (which the insurer had not obtained a statement from). These statements assisted the complainant in establishing a claimable loss and its claim.
In these circumstances, given the insurer’s denial of the claim and its reliance on expert reports, I am satisfied that it was appropriate that the complainant engage AN to provide a report.
The insurer is to reimburse the complainant the costs of AN’s report (capped at $5,000) after the complainant provides the insurer with a copy of the invoice, together with evidence of its payment. The insurer is to pay interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) from the date of payment of AN’s invoice, to the date of payment to the complainant.
No. The information does not show that the insurer’s position was unreasonable.
Under our Rules, AFCA can award up to $5,400 compensation for non-financial loss. This must relate to poor claims handling or other actions of the insurer which cause an unusual degree of stress, delay, or inconvenience. However, we adopt a conservative approach to the award of compensation for non-financial loss compensation.
The complainant says that the insurer has caused unreasonable delays in its assessment of its claim and seeks compensation.
However, as the complainant is a legal entity, I am not satisfied that it has suffered stress or inconvenience. I am satisfied that the insurer has acted reasonably and not caused unnecessary delays.
The outcome is fair in all the circumstances because the complainant has established a valid claim for an incident covered under the terms of the policy. The insurer has not established that the complainant has breached a policy condition that would allow it to reduce its liability on the claim to nil. It is also fair that the insurer reimburses the complainant for its professional costs.
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. I have reviewed and considered all of the information the parties have provided.
While the parties have raised a number of issues in their submissions, I 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.
