Car stolen, and then owner has to pay insurance excess
Insurer’s stance might seem unfair but it’s in the policy, writes Susan Edmunds.
Awoman whose car was stolen and later found damaged was upset to discover she had to pay an excess to her insurer.
She made a claim for the damage to the car and asked the insurance company to refund the excess on her policy because it was not her fault the car had been stolen and damaged.
She said it should instead have been able to seek payment from the offender, who had been located and charged by police.
But the insurer refused and she took her case to the Insurance and Financial Services Ombudsman (IFSO).
She was not successful there, either.
The ombudsman noted that the policy specified that an excess was payable in all but limited
circumstances, which involved an accident with another vehicle.
Because the damage was caused when the car was stolen, not in a crash, she had to pay the excess.
‘‘While she wanted the insurer to make an exception and refund the excess, the insurer was entitled to rely on the terms and conditions of the policy. The IFSO Scheme was unable to compel the insurer to take action outside these terms and conditions and make a goodwill payment.’’
Insurance and Financial Services Ombudsman Karen Stevens said it was one of more than 1000 complaint inquiries and 46 complaints about vehicle insurance that her scheme received last year.
‘‘We hear from many disappointed people who are dealing with a damaged car and a declined claim,’’ she said. Tim Grafton, chief executive of the Insurance Council, said a customer would need to pay an excess in most cases when they claimed.
‘‘Whether a customer is at fault for an accident does not tend to affect whether they need to pay their excess, unless the circumstances they’re in fall under an exception stated in their policy documents. This is because the customer has agreed to take that portion of the risk and cost on themselves as part of their insurance contract.’’
Stevens said she also heard from people who were surprised to discover their vehicle’s market value was less than they thought, or that they had no cover because of a breach of licence terms.
‘‘A fairly common complaint occurs when parents of teenagers discover they have no insurance cover for their damaged car, because the teenage driver was in breach of their learner or restricted licence conditions when the accident occurred. In these cases, parents can end up paying for damage not only to their own car but to another car or property.’’
In another case, a young driver on a restricted licence crashed his parents’ car.
He was distracted by a noise from the gear box and the wheel caught the side of the road.
His sister, also on a restricted licence, was in the passenger seat.
His claim was declined because he was driving outside the conditions of his licence. His parents argued that didn’t cause or contribute to the accident but the insurer and IFSO said there was no evidence to say that a suitably qualified deliver in the car would not have helped to prevent the accident.
‘‘We’d say to all vehicle owners check your policy and contact your insurer if you have a question or want something changed,’’ Stevens said.
‘‘Of course, the most important thing is to always be careful on the road.’’