'Selective Investigation': AFCA Overrules Insurer's Fraud Allegation

In the early morning of April 9, 2021, the vehicle owner attempted to offload a jet ski using the boat ramp. However, as he backed up on the concrete ramp and braked, the car continued to slide down and its trailer submerged. In the process, water entered the vehicle through the boot and driver-side door.

After a few minutes, the driver was able to turn the vehicle back on, despite dashboard warning lights. He managed to drive the car home.

An invoice from a repairer noted that a significant amount of water was found in the vehicle's boot and interior. The repairer also identified saltwater corrosion in various modules, wiring, and body components of the car.

The claim was initially declined by Insurance Manufacturers of Australia, alleging fraud and intentional action by the complainant. The insurer relied on findings from a forensic accident investigation service (FI), which pointed out inconsistency and irregularity in the circumstances of the incident.

FI's analysis of the vehicle's rear compartment and undercarriage did not align with the extent of damage claimed by the complainant. Additionally, doubts were raised about the car's ability to start given the alleged amount of water that entered.

However, AFCA questioned the selective nature of FI's investigation, noting that it failed to consider the repairer's findings or the evaluations made by the claimant's mechanic, who had examined the vehicle.

AFCA also dismissed the insurer's assessment of the claimant's motive. While noting the claimant's outstanding debts, the insurer argued that it demonstrated intentional behavior. However, AFCA took into account evidence of the claimant's net income, as well as that of their spouse.

The ruling determined that the insurer had failed to adequately consider the distinction between disorderly finances and overall financial capacity. AFCA stated, "There is no adequate assessment about the complainant's capacity to deal with the debts."

Consequently, Insurance Manufacturers of Australia is required by AFCA to accept the claim and remove any mentions of fraud or intentional behavior from the complainant's record.