A complainant who failed to disclose a history of traffic offences has lost his bid to overturn a claim denial and had his insurance cancelled following a complaints authority ruling.

The claimant held a motor policy under his company, where he was a director, covering three trucks. He lodged a claim after one of the trucks was damaged by a fire. 

Zurich Australia declined the claim after its investigations revealed the man was convicted of a criminal traffic offence in March 2021 that had not been disclosed to the insurer. It said if it had been aware of the offence, it would not have offered the policy. 

The man said he did not think the matter was relevant to his eligibility because he did not consider the incident a criminal offence. He argued the non-disclosure was “innocent and inadvertent”.

But the Australian Financial Complaints Authority says the insurer asked the complainant a “clear and specific question” at inception that should have prompted disclosure. 

“I am satisfied that the complainant knew, or a reasonable person in the circumstances could be expected to know, that his criminal convictions issued 12 months earlier were required to be disclosed,” the authority’s adjudicator said. “Even if he was unsure if he had a criminal conviction, he should not have answered ‘no’ to the question.

“A reasonable person in his circumstances would have known that this was a matter relevant to the insurer’s decision whether to accept the risk.” 

The authority says the claimant made a “relevant failure” under the Insurance Contracts Act 1984 that led Zurich to accept the policy. The insurer is entitled to limit its liability for the claim and cancel the policy, it says.

“In the circumstances, it would be unfair to require the insurer to pay the claim.” 

The authority says the insurer should refund any premium payments it received after cancelling the policy and repay the complainant with interest.

Click here for the ruling.

From Insurance News magazine: Why lithium-ion batteries pose such a powerful problem for insurers