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Ford Falcon driver with undisclosed drugs conviction loses dispute

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A motorist who failed to disclose a 2018 criminal conviction for a drug-related offence to his insurer has lost a claim dispute after his vehicle was stolen.

The driver arranged a one-year comprehensive motor policy over the phone with Auto & General in October for his 2013 model Ford Falcon. The following month, he lodged a claim for the theft of the insured vehicle.

Auto & General declined the claim, saying the car owner failed to comply with duty of disclosure obligations by not informing it of his criminal history when asked at policy inception. Had this required disclosure been made, it would not have entered into the contract of insurance, it said.

The Australian Financial Complaints Authority (AFCA) said Auto & General’s questions were clear in requiring the Ford driver to disclose the fact he had been convicted of a criminal offence and it would not have been on risk at the time of the loss “but for the car owner’s failure to fulfil his obligations”.

“I acknowledge the car owner’s opinion that it was just a minor drug charge from years prior. However, the question asked did not allow for consideration as to the seriousness or not of the criminal conviction,” AFCA’s ombudsman said.

AFCA said Auto & General’s underwriting guidelines clearly provided that individuals with a criminal conviction in the previous 10 years were an unacceptable risk.

A call recording of the Ford driver’s policy inception process showed he was asked “Have you or your partner ever been convicted of a criminal offence?,” to which his reply was recorded as “laughter, no”.

AFCA said Auto & General was entitled to that information so it could assess the risk in line with its underwriting guidelines and decide whether or not it was possible to offer insurance.

“The car owner failed to disclose his relevant criminal history and in doing so breached his duty of disclosure,” the ruling said. “The insurer is entitled to reduce its liability for the claim to nil and decline the claim … given it would not have entered into the contract had the relevant disclosure been made.”

AFCA agreed Auto & General was entitled to cancel the policy from inception and refund the policy premium, which it had already done.

Auto & General informed the man of the consequences of a failure to fulfil duty of disclosure obligations and sent him certificates of insurance which made his answers clear.

This clearly informed the car owner of the duty of disclosure at inception of the policy, AFCA said.

“Further, the car owner was provided with the relevant policy documentation outlining the information he had provided during the inception call allowing him the opportunity to ensure the information disclosed to Auto & General was accurate.”

A “reasonable person” would know to tell Auto & General if they had ever been convicted of a criminal offence, AFCA said.

See the full ruling here