Jonathan owns a car yard and arranged for a prospective purchaser to carry out a test drive on a vehicle. Jonathan had also assisted the purchaser to apply for a loan to fund the purchase. Before allowing the purchaser to test drive the vehicle, Jonathan received the finance company’s confirmation that the loan was approved, checked the prospective purchaser’s identity, address, and drivers’ licence number.
Sometime later, Jonathan discovered that the documents he relied on to confirm the purchaser’s identity were fraudulent, and he advised the finance company. The finance company did not advance the loan. However, the purchaser did not return the vehicle.
Jonathan reported the theft to the police, and made a claim under his business policy for the vehicle. The insurer declined the claim, and Jonathan complained to FSCL.
The insurer’s view
The insurer told Jonathan the claim was declined because the policy required there to be an ‘accidental loss’ (meaning there was an ‘unintended or unexpected event’). The insurer said there was no unintended or unexpected event because the vehicle’s ownership passed to the purchaser when a vehicle offer and sale agreement was signed. The intended purpose was achieved; the vehicle was sold. It simply was not paid for.
Jonathan said the insurance policy covered theft claims, and referred to the definition of ‘theft’ in section 219 of the Crimes Act 1961. Section 219 says theft is the act of taking, using, or dealing with any property with the intent to ‘permanently deprive’ the owner of that property.
Jonathan said that the ownership of the vehicle did not pass when the vehicle offer and sale agreement was signed because the agreement clearly stated that ownership of the vehicle only passed to the purchaser once the vehicle was actually paid for.
This meant there had been a theft of the vehicle because the purchaser/thief had ‘permanently deprived’ Jonathan of property that belonged to him. In addition, it was not intended or expected that the purchaser would provide Jonathan with fraudulent documentation. That is, the loss was ‘accidental’.
We opened our investigation of Jonathan’s complaint and asked the insurer for its report on the complaint. The insurer then reviewed its decision, and paid Jonathan’s claim for the vehicle (approximately $27,000).
Jonathan accepted the payment, and his complaint was resolved.
Insights for participants
This complaint highlights the importance of ensuring consumers are advised of a participant’s internal complaints process.
For some reason, in this case, the insurer instructed its lawyer to write to Jonathan, declining the claim. The insurer could have written to Jonathan (even if it had obtained legal advice before drafting its letter), and advised that:
- his claim was declined (including the reasons why)
- if he did not accept the decision, he could make a complaint to the insurer’s internal complaints process
- if the complaint could not be resolved internally, Jonathan could contact FSCL.
Jonathan would then have referred the complaint to the insurer’s internal complaints process (which is what FSCL did). Jonathan’s claim would likely have been paid, removing any requirement for FSCL to become involved and for him to incur legal costs.