The case arose when the driver, in May of the following year, received a demand from the insurer of the other vehicle involved, prompting him to file a claim with Taxi Care Club, a mutual fund for professional drivers. While the claim was accepted, he faced a $1500 universal excess along with a $2500 late reporting excess, reduced from the initial $5000.
AFCA concluded that the policy terms regarding the discretionary excess were not absolute and should be applied only if the delay had prejudiced the insurer's ability to manage the claim. The Taxi Care Club had contended that the delay hindered its ability to inspect the other vehicle for pre- and post-repair checks, and that continued use of the taxi might have led to further damage.
However, AFCA's investigation found no evidence suggesting that repair costs were inflated or could have been mitigated with timely inspections. The ombudsman emphasised that the outcome exercised must be fair and in line with members' expectations, noting that no additional damage resulted from the delayed report or the driver's continued use of the vehicle.
For consumers, this ruling underscores the importance of understanding contract terms related to discretionary charges, as well as their potential relief under equitable considerations. For mutual funds and insurers, it emphasises the necessity for transparent communication of terms and the fair application of fees.
Looking ahead, this decision may influence how insurance providers and mutual funds structure their policies regarding late reporting fees, potentially adopting a more consumer-centric approach when discretion is involved. Industry experts predict this will lead to heightened scrutiny and potentially more favourable outcomes for claimants in similar situations.
