The Insurance Manufacturer of Australia raised concerns that the claimant had not been truthful and frank while describing the circumstances surrounding the event. This led the insurer to suggest that the claim was more likely fraudulent. The homeowner argued that the insurer relied on incorrect evidence, with no actual proving evidence against them.
The Investigative Process by the Insurer
The insurer relied on investigations from its special assessor and evidence from the complainant's neighbours as well as the claim's circumstances to come to its decision. It was also noted that the loss occurred just three months after the inception of the home-building policy, and the man only lodged the claim months after the fire event.
The insurer's investigator also pointed out that the claimant had made vague and inconsistent statements that led to suspicions of human involvement as a result of the fire. A forensic report was also issued detailing hypothetical causes of the fire, with no determination of the source.
The Ruling by the Australian Financial Complaints Authority (AFCA)
The Australian Financial Complaints Authority considered the evidence presented by both parties and ruled that there was insufficient evidence to prove that the fire was deliberately lit. The report also highlighted that some nearby residents held concerns regarding the property owner, which may have influenced their testimony. The forensic report presented multiple hypothetical causes of the fire, with no specific determinations made.
The complainant argued that they had intended to lodge the claim on May 25, 2021, a day after the fire, but was told by an Insurance Manufacturer of Australia representative that they required a police report number before proceeding. The insurer questioned the complainant's recollection, as this was not usual practice. However, call records showed that the complainant phoned the insurer on May 25th for approximately 38 minutes. Therefore, his recollection was likely accurate.
The Final Ruling and Compensation
The Australian Financial Complaints Authority found that the insurer's case against the homeowner was only based on circumstantial evidence, which was not convincing enough to prove fraud. AFCA required the insurer to accept the claim and pay the homeowner $2000 for non-financial losses caused by the insurer's handling of the claim, and awarded him $5000 contribution towards his legal costs.
The Australian Financial Complaints Authority noted that the insurer continued to push the investigation despite limited information indicating that the claim was fraudulent. That continued investigation prolonged the entire claim's process, which was not necessary. The final ruling highlighted that while the insurer had the right to investigate the claim initially due to the circumstances, after a certain period, it was reasonable to conclude that an allegation of fraud was not present.
The homeowner won the dispute after successfully challenging the insurer's decision to decline the claim. The ruling reveals the need for insurers to investigate claims responsibly and gather reasonable evidence before alleging fraud. As a homeowner, it is crucial to be honest and transparent in all claims made to avoid any suspicion.
