'Pay it back': insurer can recover claim payment after crash timing probe

A driver who took out a comprehensive motor policy shortly after an at-fault crash has lost his claims dispute and will be required to pay back his insurer for a settlement it paid out.

The complainant lodged a claim on May 22, 2021, after he had collided with a stationary vehicle that deflected into the rear of a bus, which was also not moving.

Auto & General accepted the claim and found the incident to be the policyholder’s fault. It assessed the man’s car a total loss and paid him over $7500, along with an $800 salvage valuation.

The insurer also paid a total of $15,028 to the owner of the third-party vehicle that was hit for losses that they sustained.

The owner of the damaged bus sought recovery for the damage sustained to their vehicle and served the complainant with a statement of claim on August 5, 2021. Auto & General investigated the bus drivers’ claim statement, which included further information regarding the circumstances of the crash.

It said that the information showed that the driver incepted the policy after the crash occurred and informed him that his claim had been denied.

The insurer provided the Australian Financial Complaints Authority (AFCA) with documents, including a police report showing that the loss occurred at 7:05am and a photograph of the damaged vehicle taken at 7:07am.

The driver’s insurance certificate showed that the period of cover for the policy began at 7:17am May 21, 2021. When lodging the claim, the complainant listed the crash as occurring at 7:20am.

Auto & General said that its initial acceptance of the claim “relied on the complainant acting in the utmost good faith when providing information relevant to the claim circumstances”. The insurer asked the complainant to repay the $23,245 associated with the costs to his vehicle and the third party’s vehicle.

The claimant said he provided the insurer with “accurate information to the best of his knowledge” and that the insurer’s decision to cover the claim was “the result of the insurer’s negligence rather than any lack of good faith on his part”.

He said it was unfair for the insurer to change its position and maintained that it should continue defending him against the bus driver’s proceedings.

AFCA said that the available information showed that the policy was incepted after the claimed accident occurred and that Auto & General was entitled to deny the claim.

It said the insurer was not negligent in its decision to initially cover the claim because it had relied on incorrect information from the complainant and that it was entitled to recoup the amount it paid.

“The information he provided on when the accident occurred, which led the insurer to initially accept the claim, was incorrect. As such, it would not be fair to compel the insurer to maintain acceptance of the claim,” AFCA said.

“Further, it is fair that the insurer be permitted to seek recovery from the complainant as he was not entitled to the payments it made to him and on his behalf.”

The ruling said Auto & General is required to return the value of the policy premium totalling $739, which it withheld because the complainant owed it money.

AFCA said the policyholder had 21 days from the determination to inform the insurer on whether he would use the deducted amount towards his debt payment.

Click here for the ruling.