A company that lodged a complaint against its insurer’s decision to settle a third-party accident claim and charge excess fees has lost its dispute after an Australian Financial Complaints Authority (AFCA) determination.

The company filed the complaint in relation to a collision involving one of its garbage trucks and a third-party vehicle on September 2, 2020.

The complainant did not lodge a claim for damage to its vehicle but initiated one for legal liability cover after the third party’s insurer demanded $8,661.28.

The claimant’s insurer, Sura, accepted the claim and elected to settle the matter after reviewing evidence from the two parties. It also chose to apply a policy excess of $2000 for the claim.

The policyholder disputed the insurer’s decision, saying it had not defended the third-party claim correctly and the truck driver was not at fault for the collision.

The driver said he had been “reversing slowly, with care” with the warning lights on at the time of the collision.

He said that the third party “could clearly see his vehicle and the manoeuvre he was making,” and “had enough space to slow down and give way to him but chose not to and caused the collision”.

The third party said they slowed down and “preparing to stop” when they spotted the garbage truck reversing, but elected to go forward after the vehicle halted.

They reported that the complainant “continued reversing and hit the left side of their vehicle with the rear of his vehicle”.

The insurer said that the Mobile Plant and Machinery policy outlined that it held “full discretion” to “take over and conduct the defence or settlement of any claim,” on behalf of the insured.

“We have full discretion in the conduct of any legal proceedings and in the settlement of any claim. You must co-operate by giving us any statements, documents or assistance we require,” the policy’s Product Disclosure Statement (PDS) states.

AFCA acknowledged that the insurer held a responsibility to ensure that its discretion “must be exercised fairly and reasonably,” but said it was within its rights to settle the claim as it saw fit.

It said that the two parties’ explanation of events, as well as supplied CCTV footage, showed that the “onus was on the complainant to ensure it was safe ... and give way to the third-party”.

“The complainant’s CCTV footage shows the third-party vehicle was established in its lane and travelling on the road before the collision occurred. Therefore, I am satisfied the third-party had right of way,” AFCA said.

“The CCTV footage also shows the complainant’s vehicle slowing down or stopping just before the collision occurred, which aligns with the third-party’s version of events.”

The ruling also determined that Sura was entitled to apply the $2000 excess as stated in policy terms.

AFCA referred to the PDS, which said that policyholders “may be required to pay one or more excesses,” after lodging a claim. The Policy Schedule stipulated that the excess for garbage trucks would be charged at 1% of the insured sum, or $2000, depending on which one was greater.

Click here for the ruling.