A Victorian driver who tested positive for marijuana after his car collided with a friend’s vehicle and hit a tree has won a claim dispute and $1000 compensation over an insurer’s handling of his case.

In its decision on the dispute, the Australian Financial Complaints Authority has warned insurers not to “embark on a fishing exercise to seek to discredit a complainant or delay making a decision”.

It says Insurance Manufacturers of Australia should pay towing and storage costs and $1575 (the car’s $4300 market value minus excess and salvage received).

“The insurer has concerns as to the circumstances of the collision, but these are based largely on speculation and unlikely to be resolved by further investigation,” AFCA said. “There is no evidence to establish wilful or reckless conduct or that the presence of cannabis in the driver’s system caused or contributed to the accident.”

Its claims handling involved an “unusual degree of time taken to resolve the situation” and compensation is fair, AFCA says, adding there is no evidence the complainant misled the insurer.

The IAG-RACV joint venture had suggested it could deny liability on the grounds the driver, referred to as RG, was under the influence of drugs and/or engaged in improper vehicle use. It said the driver and his mother, who was the policyholder, failed to co-operate and supply all information to validate the claim, which was lodged a year ago.

AFCA rejects this. “The insurer’s insistence on phone records and other information appears to be more a fishing exercise than a genuine investigation of the circumstances of the accident,” it said. 

RG told the insurer’s investigator he had been driving in the left lane about 10pm in May last year when the driver of the other vehicle, who was known to him and was speeding, hit him from behind.

This caused his vehicle to spin onto the median strip and hit a small tree. 

The police report mentioned possible street racing between the two, noting the driver of the second vehicle spoke with RG before driving off and being returned to the scene.

RG emailed police with concerns over the report’s accuracy, saying a diagram was incorrect because he was hit on the rear driver’s side panel and that only his vehicle entered a spin when the report said both cars had.

Photographs provided by his mother showed damage consistent with his version of events. AFCA says there has been no response from either the insurer or police to this.

About five months after the accident, the insurer requested purchase, registration and service documents, VicRoads history, mobile phone records and all bank statements for savings accounts and credit cards loans. This was after it had interviewed RG and obtained police statements and details of the other driver. 

“It had sufficient information ... The relevance of the phone records is unclear. There is no suggestion that the collision was staged. I cannot see how financial documents are relevant,” AFCA’s ombudsman said, adding there is no evidence the car’s mechanical condition contributed to the accident. 

In January, the insurer said it needed another interview with the driver, even though it had done so in September.

“I do not understand the insurer’s response,” the ombudsman said. “The complainant and [the son] have provided all relevant information to allow a decision.”

AFCA says the insurer offered no toxicology report interpretation and made no attempt to match the police report with the driver’s story, or to demonstrate it had contacted a witness or the other driver. 

“Given the time that has elapsed since the incident, the information that was available to the insurer and the quantum in dispute, the insurer should have decided on liability in this matter,” the determination said. 

See the ruling here.