Insurers Ordered to Compensate Despite Theft Claim Doubts

10

The policyholder filed a claim two days after her vehicle was reported stolen on March 23, 2022. She recounted purchasing the car from a friend, who is a certified motor mechanic, and leaving it at their house for servicing.

Insurance Manufacturers of Australia had raised numerous concerns about the circumstances surrounding the theft. These included a lack of proof of purchase and incomplete information about the vehicle's service history. The car was insured despite the new owner not driving it, which also raised suspicions. In addition, the friend did not cooperate with the insurer’s inquiries.

AFCA responded by stating that it is common for individuals to not have a purchase receipt when buying a vehicle privately. They accepted the bank statements showing a $35,000 transaction labeled "AA-Van" as adequate evidence of payment. They also acknowledged that service history details may have been in the vehicle at the time of theft.

The ruling emphasized that purchasing insurance was logical as it included coverage for non-driving events such as theft. While cooperation from the mechanic friend would have aided the investigation, it was not deemed a sufficient reason to reject the claim.

Concerns were also raised by the insurer about why the car remained with the friend for over nine months and inconsistencies in the car’s documented compliance and build dates. AFCA found no definitive reason for the extended storage but accepted explanations, such as Melbourne's lockdown and the complainant’s husband's health issues, as plausible.

The authority acknowledged a confusing situation regarding date inconsistencies but noted that the vehicle identification number (VIN) was consistent across documentation, thus confirming ownership and associated loss.

“Although it seems unlikely that a certified motor vehicle tester would make an error in the build date, it’s not an implausible mistake to make,” commented AFCA’s adjudicator.

Given all evidence, AFCA concluded that the complainant should be recognized as the owner who suffered a financial loss, and they instructed Insurance Manufacturers of Australia to accept the claim and process the payout.

For more details on the original case and ruling, refer to the Australian Financial Complaints Authority’s documentation.

Published:Monday, 29th Jul 2024
Source: Paige Estritori

Share this news item:

Insurance News

Rising Insurance Premiums Challenge Australian SMEs 29 Dec 2025: Paige Estritori Small and medium-sized enterprises (SMEs) across Australia are increasingly burdened by soaring insurance premiums, with many facing hikes of 30% or more within a single year. This surge has led some businesses to either reduce their coverage or forgo insurance altogether, exposing them to significant financial risks. - read more

Upcover's New Management Liability Insurance for SMEs 29 Dec 2025: Paige Estritori Australian insurtech company Upcover has unveiled a new management liability insurance product designed specifically for small and medium-sized enterprises (SMEs) and sole traders. This offering aims to provide comprehensive protection against a range of risks that business owners may encounter. - read more

QBE Strengthens Cyber Insurance Offerings 29 Dec 2025: Paige Estritori In response to the growing prevalence of cyber threats and increasingly stringent regulations, QBE Insurance has announced a strategic initiative to bolster its cyber insurance capabilities. This move aims to provide brokers and their clients with more robust support in navigating the complex landscape of cyber risks. - read more

Australian Insurers Report $1.11 Billion Profit in Q1 2025 29 Dec 2025: Paige Estritori The Australian insurance industry has reported a net profit after tax of $1.11 billion for the first quarter of 2025, according to the latest data from the Australian Prudential Regulation Authority (APRA). This figure includes contributions of $990 million from insurers and $123 million from reinsurers. The insurance service result, a key measure of underwriting performance, stood at $1.32 billion for the quarter, complemented by investment returns totaling $1.18 billion. - read more