A complainant who had his claim denied after he failed to inform his insurer of a previous criminal conviction has won his dispute after an Australian Financial Complaints Authority (AFCA) determination ruled that the wording of questions had been misleading.

The man lodged a claim on January 17 last year, two days after one of his insured excavators caught fire and only shortly after he took out the equipment and machinery insurance policy.

NTI Limited denied the claim, saying that the insured had breached his duty of disclosure by failing to inform it of his previous criminal history, namely convictions relating to domestic violence and assault.

The insurer said if it had known of the convictions when the claimant was purchasing the policy, it would not have provided him cover.

Under a section titled “driving information”, the insurer asked the prospective insured to indicate if any potential drivers “had any criminal convictions or serious driving convictions (including noncustodial sentences) in the past 10 years,” alongside a series of other questions relating to driving infringements and insurance history. The complainant answered “no” to the questions.

NTI says the insured failed to inform it of his assault and domestic violence convictions in 2016, for which the man served 13 months in prison. It said that each question was “clear and independently separate” and that the offences applied to the first question about "any criminal convictions”.

The complainant’s lawyer maintained the man believed the question was “about criminal convictions related only to motor vehicles and their usage,” of which he held none.

The ruling acknowledged that the complainant had been convicted of a serious criminal offence but said that he did not breach the duty to disclose, as a reasonable person would have only thought the questions were related to driving offences based upon the wording.

It noted that the step in the application process was titled “claims and driving information”, of which the question fell in the “driving information” section. It said the remaining questions in the section concerned motor insurance, driver licensing, serious traffic infringements and fitness to drive.

AFCA highlighted that next to the questions, there was a statement from the insurer that said, “we need to understand your driving history to ensure the best cover for your business…”

The ombudsman said the expectation for a reasonable person was “to have disclosed only criminal offences related to driving” and required NTI to cover damages relating to the claim, with the insured sum being $58,000.

The policy’s product disclosure statement included a clause that said the insurer “will not pay an amount exceeding the lesser of the insured vehicle’s market value and the sum insured at the time of the loss”. The insurer was also mandated to pay interest on the claim settlement.

The ruling required NTI to reinstate the claimant’s policy but allowed it to deduct funds from when the policy was cancelled towards the settlement payment.

The ombudsman rejected submissions from the complainant that the insurer would have acted in a discriminatory manner if it had denied the man due to his criminal history, saying there was no “reasonable basis for these allegations”.

Click here for the ruling.