In July 2022, the driver filed a damage claim for his vehicle. However, the insurance company cancelled the policy and rejected the claim, arguing that the driver had not disclosed his full driving history when he took out the policy in February of the same year. Had the insurer been aware of the undisclosed licence suspensions, it would have declined to provide coverage.
The driver, in response, sought AFCA's intervention and requested Eric Insurance Ltd to accept and settle the claim. The driver explained that he had applied for the policy online through his mobile phone, where he provided as much detailed information as the limited space allowed.
AFCA acknowledged that the claimant had truthfully declared his most recent licence suspension, stating "Yes" and providing details for it. However, the driver had failed to tick a box provided for policy applicants to include any additional licence events.
"If this box is ticked, further sections appear for the complainant to provide information about additional licence events," AFCA explained. "Importantly, the insurer's system does not require the complainant to confirm whether all licence suspensions or events have been disclosed. Instead, the system allows the complainant to proceed without ticking the box."
AFCA further emphasized that the policyholder should not be accused of "making a misrepresentation" simply due to his failure to answer a question.
"Additionally, the insurer has provided evidence of a call recording with the complainant shortly after the policy was issued. During the call, the insurer explicitly asked the complainant to confirm the accuracy of his accident and driving history. The complainant responded with 'Yes.' This response cannot be considered a misrepresentation," AFCA stated.
AFCA concluded that the insurer had the opportunity to inquire about any licence suspensions or events during the application process.
Consequently, the insurer was instructed to offer reinstatement of the policy. If the policyholder chose to have the policy reinstated, he would be able to proceed with the claim, which the insurer would have to accept and settle in accordance with the policy terms and conditions. The complainant would be responsible for paying any policy excess, as stipulated in the policy.
