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Gone in 90 seconds: insurer wins dispute over theft of unlocked car

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An IAG customer whose car was brazenly stolen when his partner briefly left it unlocked while popping inside to collect their baby has lost a claim dispute.

The insured vehicle was parked unlocked on the man’s driveway for less than two minutes in front of an open front door in October when the man and two friends, who were sitting inside the house at the time, saw it being driven off.

IAG declined the claim on the basis the insured vehicle was unlocked and unattended at the time of the theft and that triggered its policy exclusion.

The Australian Financial Complaints Authority (AFCA) backed the insurer, saying IAG’s policy exclusion was “in plain English” and its intent was unambiguous.

"The policy exclusion is clear,” AFCA said. “The act of leaving the vehicle unlocked can reasonably be regarded as having caused or contributed to the loss.”

The man pointed out that the keys to the car had not been left in it and said a longer period of time - or leaving a car unlocked in an irresponsible manner or location – should be required to trigger the exclusion, and his partner only left the car unlocked for 90 seconds while inside to collect their baby.

“I acknowledge that the thieves appear to have acted quite quickly and brazenly in stealing the insured vehicle. However, the exclusion clause does not specify a qualifying time period. Nor is it possible to say that 90 seconds would be below a reasonable threshold,” AFCA’s ombudsman said.

"The exclusion clause means if an insured vehicle is left unlocked and is stolen, the loss will not be covered. The exclusion is in plain English and its intent and meaning are clear. It is not necessary to read into the exclusion the pre-requisites for which the complainant contends. The exclusion makes commercial sense.”

IAG's policy stated it did not cover "theft if you leave the car unlocked or with its keys in the car” and "damage or theft if you have not taken reasonable care to secure your car”.

AFCA said it was noteworthy that the specific unlocked vehicle exclusion did not include “concepts pertaining to irresponsibility” which the car owner had sought to “read into the phrase”.

“The policy excludes cover for theft when the vehicle was unlocked. It would be unfair to for the insurer to have to pay the claim when the policy does not require it to do so,” AFCA said.

"The act of leaving the car unlocked can reasonably be regarded as having caused or contributed to it being stolen.”

See the full ruling here