Owner of $118,000 Tesla with undisclosed demerits loses dispute

A Tesla Model S driver seeking $75,000 in repair costs has lost a claim dispute with QBE after he failed to disclose seven traffic offences which incurred demerit points and speeding fines in the three years prior to policy renewal.

The motorist had said QBE’s decision to pre-populate his policy renewal form with a ‘no’ response to its driving history question constituted an “active change by the insurer,” and this represented “at least some contributory negligence from the insurer”.

He said when the policy was incepted he had been under pressure with a busy day at work and the necessity to have the vehicle insured as soon as possible, and skimmed over the relevant question and did not read it correctly.

At renewal a year later, he said a staff member at his company reviewed and completed the paperwork and so the only time he responded “no in his own hand” in relation to questions about traffic offences was the original insurance proposal.

The Australian Financial Complaints Authority (AFCA) ruled QBE was entitled to decline the claim and cancel the policy and should refund the 2020/21 policy period premium.

“While the insurer pre-populated the renewal form with a ‘no’ answer to the question about traffic offences, this reflected the information the insurer held at that time as the complainant had answered no to the same question the previous year when incepting the policy,” AFCA said.

The WA motorist held a QBE prestige motor vehicle insurance policy, purchased via a broker in May 2019, providing cover for his 2017 Tesla Model S for an agreed value of $117,930. He lodged a claim a year ago after an accident and QBE obtained a quote which indicated the repair cost would total almost $75,000.

QBE’s investigations revealed the man had incurred seven traffic offences in the three years prior to the most recent policy renewal. Four incurred demerit points and the other three attracted a $100 fine. This was not disclosed despite him being asked to do so in the renewal documents.

QBE declined the claim accordingly and cancelled the policy.

The Tesla owner took the matter to AFCA, offering to negotiate a settlement and saying his non-disclosure was innocent and unintentional, and that QBE did not adequately make him aware he needed to review the renewal documents.

QBE should have required validation by way of signature or similar, he told AFCA, to make it adequately clear to him that he needed to review all of the information contained within the renewal paperwork for accuracy. It was “unreasonable and perhaps uncommon” for a person seeking renewal to be expected to update and edit details in the renewal paperwork, he said.

AFCA said even if the non-disclosure of his driving history at policy renewal was innocent in nature, “this does not advance the complainant’s position”.

“It is clear from the underwriting guidelines that had the complainant disclosed his driving history and the seven traffic offences in the three years prior to renewal as required by the question asked on the renewal paperwork, then the insurer would have declined to renew the policy. Therefore, the insurer would not have been on risk at the time the accident occurred.”

The original QBE application form asked if he had any traffic offences in which a penalty was imposed or he lost points. He had answered no. The policy was subsequently renewed the following year and QBE emailed a policy renewal to the Tesla driver’s broker along with the relevant product disclosure statement.

The renewal advised him to “read the policy details and duty of disclosure” and ensure the information was correct, and to contact his financial services provider or the insurer if any information was incorrect. The final page stated if a complainant did not tell the insurer something he was required to QBE may cancel the policy or reduce the amount it would pay in the event of a claim.

AFCA said it was not persuaded QBE should have done more to make him aware the information on the renewal documents needed to be reviewed for accuracy.

“It is always the responsibility of an insured (and their broker if applicable) to review policy paperwork and ensure the information contained within is accurate and advise the insurer of any changes,” the ruling said.

“This being the case, it would not be fair to find the insurer either partially or fully liable for the claim and nor would such a finding be in compliance with the Insurance Contracts Act.”

See the full ruling here.