A driver who sought cover for damage to a hire car after a not-at-fault accident has lost her claim dispute after the complaints authority sided with her insurer. 

Insurer IAG had provided the vehicle to the claimant while her insured car, which had been damaged in a separate event, was being repaired.  

On October 12 2020 the claimant was involved in an accident with the hire car and lodged a claim for the insurer to cover the cost, which was declined. IAG said its policy did not respond to losses that resulted from the use of hire cars.  

It accepted that its policy covered up to $2000 for any excess or security bond payable under agreements with the hire car company, which it did pay.  

However, it maintained it was not liable for the accident loss and said the complainant needed to lodge a claim with the hire car provider. 

The insured argued IAG was responsible for the loss as it “put her in this situation by choosing the hire car provider”, which she said was unreliable. She said the insurer misled her about what it would cover, and it should pay her $10,000 plus interest.   

However, in its dispute ruling, the Australian Financial Complaints Authority says the policy covers the insured vehicle only and “clearly and unambiguously excludes cover for loss or damage to the hire car or liability from the use of the hire car”. 

The authority accepts IAG “fulfilled its obligations as set out under the policy” and says there is no evidence it misrepresented what was covered.   

“While I acknowledge that the complainant is aggrieved by the insurer’s decision, the complainant had the policy documents setting out the full details of cover prior to the loss occurring,” the authority’s adjudicator said. “The insurer is not liable for any loss or damage to the hire car, or liability from the use of the hire car.”  

It says the damage is outside IAG’s scope of cover and it “would not be fair to require the insurer to cover the claim”. 

Click here for the ruling.