A finance company has been ordered to pay for repairs to a client’s car after she unexpectedly had no comprehensive motor insurance after an accident, despite that cover being a requirement of a loan that had been set up.

The woman’s loan application, organised by the company, contained insurance information for an unrelated vehicle, including an insurance policy number.

The Australian Financial Complainants Authority (AFCA) - which describes the firm as a broker - says the “critical issue” was where that policy number for comprehensive insurance and other related details came from.

The firm arranged finance, warranty and asset protection insurance, which were incorporated into the finance. The woman said the broker also gave the impression that comprehensive insurance on the vehicle was arranged as part of the service.

For the loan application to be completed, it required confirmation of comprehensive insurance applicable to the vehicle, including the policy number.

The broker said the insurance information detailed within the loan documentation was supplied by the woman and this was the normal process, but AFCA found in the woman's favour.

“It is difficult to see how it was the complainant who provided those details to the broker,” AFCA said. “It is more likely than not that it was the broker who entered the incorrect details into this loan documentation.”

The broker said it advised the woman it had not arranged full comprehensive insurance cover for her and that she would have to arrange it herself, and that she supplied the insurance policy number to the broker for the loan documentation. The broker denied loading unrelated insurance information into the loan documentation.

The woman disputed this, saying she assumed that the broker was taking out the comprehensive insurance and therefore she did not provide the details to the broker.

The error led the woman to believe her car held comprehensive insurance cover at the time the loan contract was finalised, AFCA said.

“It follows that the error made by the broker caused the complainant to believe that at the time of the loss, she held comprehensive motor vehicle insurance applicable to the insured vehicle,” AFCA’s ruling says.

“Given the loss and damage to the vehicle occurred in circumstances which would have been covered by a comprehensive insurance policy, had one been in place, the broker is responsible for the complainant’s loss.

“The broker has not met its obligations to the complainant and the broker is required to meet this claim in accordance with this determination."

AFCA ordered that the broker settle fair value for repairs to the car, or the pre-accident value less salvage costs if deemed a total loss.

See the full ruling here.