Australia is a wide brown land and hence most adults have a driving license and a car. Which means that all of us at the very least have Compulsory Third Party (CTP) insurance and many of us have a form of more comprehensive car insurance as well.
It seems that most of us take a responsible attitude towards our car insurance cover, with a recent Canstar Blue survey of almost 2,000 drivers finding that 77% of us have enough insurance to pay out any car loan in full if our car was to be written off.
Sometimes, though, our car insurance experience doesn’t go according to plan – and that’s when we turn to the Financial Ombudsman Service (FOS). Each year FOS details the complaints received by members of the Australian public; for 2015/16 the FOS accepted 6,858 general insurance claims over the 2015/15 year, 43% of which were car insurance complaints.
Below are two examples of the types of car insurance claims that the FOS sees regularly…
The applicant claimed for damage to her car, which the Financial Service Provider (FSP) accepted and authorised its repairer to repair. However, the repairer did not complete the repair for some 9 months because of:
- the lack of a wiring harness that had to be ordered from overseas
- there was a delay in the delivery of the part.
FOS considered it appropriate to award compensation in this case because the evidence showed:
- the FSP had unreasonably delayed the repair
- the FSP authorised the repair to its preferred repairer without finding out if the applicant’s preferred repairer or other repairers were able to complete the repair more quickly
- the FSP did not try to source the unavailable part elsewhere
- the FSP did not make any reasonable attempts to speed up the repair
- the FSP gave the applicant several estimated completion dates, although it had no idea when the part would arrive from overseas or the repair would be completed
- the applicant was overwhelmingly left on her own to pursue the claim
- The FOS Approach to motor vehicle insurance claim delays – Version 1 – December 2014 Page 8 of 8
- the FSP asked the applicant to chase the manufacturer for the part, although it undertook the obligation to repair the vehicle was poorly repaired.
The applicant was awarded:
- compensation for financial losses arising from the FSP’s delay, such as storage cost, subject to her supplying evidence of the loss
- $3,000 for being subjected to unusual inconvenience, delays and interference with her enjoyment of her car.
The financial services provider refused to pay the claim of Mr B for damage to a motor car following an accident, on the basis that he, as policyholder, had not made disclosure that he had reached the maximum 12 penalty points. Mr B claimed he was unaware he had reached the maximum number of allowable demerit points . Mr B said he did not receive the warning letter and the law of non-disclosure is clear that you cannot be obliged to disclose what you do not know.
At relevant times, Mr B held both a Queensland and New South Wales licence.
During the course of the dispute, financial services provider wrote to Mr B offering to “welcome him back” as a policyholder. The issue arose as to whether this was a marketing tool or a direct invitation to Mr B. Whilst this was not central to the decision making, it demonstrated the risk a financial services provider runs when on the one hand it says it would not insure an individual because of their particular driving history, and on the other hand sends them marketing material, with an invitation to re-insure.
In this determination, the Financial Ombudsman Service panel found accepted that a person cannot disclose what they do not know. After considering all the material provided by the parties, the Panel was not satisfied that the financial services provider had discharged the burden of proof that Mr B failed in his disclosure obligations to disclose he had received the maximum allowable demerit points at policy renewal.
Car insurers making claims easy
CANSTAR’s 2016 survey of car insurance claims satisfaction, via a 3,130-person consumer survey, found that a number of insurers are making the claims process easy. In fact, 70% of survey respondents said they were satisfied or highly satisfied overall with their last car insurance claim. For more information, read this article.
Across the 63 insurance policies surveyed by Canstar:
- 16 allow claims to be made via mobile app
- 37 allow claims to be made online
- 57 provide a 24-hour helpline
It does stand to reason that if your insurer can make the claims process easy, you’re going to have a better experience. Given the high rate of smartphone ownership in Australia, a smartphone app can be a terrific way to help drivers step through the claims process, from taking photos, to recording what happened, to knowing what details they need to collect from anyone else involved in the accident.