A car owner whose vehicle was stolen during a fraudulent sale process has won a battle to have his losses covered by his insurer.  

The man arranged to sell his 2015 Chevrolet Corvette for $205,000 in December last year to a buyer who wanted it sent to Rockhampton.  

The owner agreed to sign registration and plate transfer papers before transporting the vehicle.  

The next day, he received payment for the car via a fraudulent cheque – which was dishonoured later that day – and took the vehicle to Rockhampton.

On the following day, he received a phone call telling him someone was trying to sell the vehicle and reported the theft to the police.  

Insurer SGUAS denied the owner’s claim, saying the car was not stolen because the man “willingly signed over” the registration before receiving the cheque. It said this meant the policy was non-existent when the man suffered the loss. The insurer also argued the theft was not a “sudden and accidental event” and should have been considered a civil matter. 

The complainant said the loss should be covered because it was a criminal matter, given police were investigating it as fraud and there had been a warrant for the offender’s arrest.

The Australian Financial Complaints Authority agrees with the complainant, saying the evidence shows the buyer “sought to gain possession of the complainant’s vehicle fraudulently”. 

“The exchanged information shows the alleged offender acted dishonestly to secure possession of the insured vehicle ... there is no information to suggest the alleged offender acted with genuine intent to purchase the vehicle legally,” the authority said. 

It says the policy had not ended, because no payment was made to complete the sale.

SGUAS said even if the claim was valid, it would have been denied because the owner failed to take reasonable steps to prevent the theft.

The insurer noted the complainant imposed two conditions in a verbal agreement with the buyer: the funds were to be paid with a bank cheque, and deposited before the vehicle transfer. It said that by satisfying only one of these conditions before the transfer, he recklessly courted danger. 

The authority disagrees, saying the man believed these conditions were met when the funds were credited to his bank account, only to later be taken away. 

“This showed he took measures to avoid the risk,” the authority said. “The fact he did not verify the cheque was a bank one does not mean he deliberately or recklessly court the risk, particularly given he checked his account and the funds were credited.”

AFCA requires the insurer to accept and settle the theft claim based on the policy terms.  

Click here for the ruling.