A driver has won her fight for a payout over damage to her car despite the vehicle being unregistered, after the Australian Financial Complaints Authority ruled in her favour.

The woman lodged the claim after an uninsured third party rear-ended her car in September last year, leaving it a total loss.  

RACQ-backed insurer Carpeesh denied the claim and cancelled the woman’s policy after it discovered the insured vehicle’s registration expired on May 1 last year.  

Carpeesh said it declined the claim because the insured vehicle did not meet its definition of “your car”, meaning “registered car owned by you which is described on the policy certificate”.  

The insurer argued the woman breached her policy conditions and the vehicle’s unregistered status made it an “uninsurable risk” according to its underwriting guidelines.  

It said its policy required the insured to inform it of any changes relating to the vehicle’s registration and it was entitled to cancel the policy based on the non-disclosure.  

But the policyholder said she was unaware the vehicle was unregistered until she needed to provide registration papers to the insurer. She explained she had recently moved states and had not been notified her registration was due.  

The complaints authority accepts that the woman failed to inform the insurer about the registration, but notes the policy indicated such a failure would result in a change of premiums and excesses – not a policy cancellation.  

It says the insurer’s interpretation of “your car” is unreasonable, as the vehicle was owned by the complainant and had been registered in her name.   

The authority also challenges Carpeesh’s reliance on a general exclusion relating to the car’s unroadworthiness, which it says does not “specifically relate to the registration status of the vehicle”.  

“Even if I accept the vehicle was unroadworthy (which I do not), in these circumstances, section 54 of the [Insurance Contracts Act 1984] would assist the complainant,” the authority’s adjudicator said. “This is because the insurer has not established the fact the vehicle was unroadworthy was reasonably capable of causing or contributing to the loss, or that it prejudiced its position. 

“The complainant was at no fault for the accident, and the vehicle’s roadworthiness had no relevance to the incident.”  

Carpeesh is required to accept the claim and reinstate the complainant’s policy.  

The insurer must also pay $3500 compensation for non-financial loss after it was found to have caused the claimant “immense stress and inconvenience” with its claims handling.  

The authority has criticised Carpeesh’s attempt to recover $7000 from the policyholder after declining the claim, saying its actions were not outlined in its policy terms and were “not consistent with general or good industry practice”. 

Click here for the ruling.