'Unacceptable risk': vehicle owner loses cover after daughter's single at fault claim

A complainant has lost a challenge against her insurer’s decision not to renew her comprehensive motor policy due to the “unacceptable risk” associated with her daughter’s claims history.

The policyholder sought to have her annual premium refunded after Auto & General informed her on August 16 last year that it could not renew the policy because of the claims history of one of the drivers listed on the policy.

The insured’s claims history showed two listed claims in March and June last year involving the daughter, who was referred to as Miss S. The second claim was identified as an “at fault” claim, which the insurer considered a “non-recoverable” claim.

The complainant acknowledged that Miss S was involved in the incidents and lodged the claims.

In the letter sent to the insured, Auto & General said it considered “risk factors” such as driving and claims history as part of its acceptance criteria before offering an insurance policy.

The insurer provided the Australian Financial Complaints Authority (AFCA) with an excerpt from its underwriting guidelines which stipulated that a person under the age of 21 who lodged a non-recoverable claim in the previous 12 months would be considered an “unacceptable risk”.

AFCA backed Auto & General’s assessment and said the insurer was entitled to its decision to decline the policy renewal.

“I am satisfied that the June 2022 incident was a ‘non-recoverable’ claim for the purposes of the insurer’s underwriting guidelines. Therefore, based on the claim history, Miss S became an unacceptable risk for the insurer,” AFCA said.

The policyholder said she had been unaware of the insurer’s “conditions” and would not have lodged the claim if she knew that it would have led to the policy renewal being declined.

AFCA said Auto & General was not required to disclose its underwriting guidelines to the insured.

The ruling dismissed the complainant’s argument that she was entitled to a refund of her policy for extra fees associated with having Miss S listed, saying that she “obtained the benefit of the policy,” during the period of cover.

“The complainant lodged two claims during the period of cover. Therefore, I am satisfied the complainant obtained the benefit of insurance during this period,” AFCA said.

“I consider it would be unfair to compel the insurer to refund the premium.”

Click here for the ruling.