The Australian Financial Complaints Authority has allowed Allianz to reduce its payout for a car damage claim after the vehicle owner’s incorrect model description led to an inflated insured value.

The claimant bought a 2013 Range Rover Dynamic for $41,750 from a private seller on June 2 last year. He picked it up the next day, but the car caught fire on his drive home, leaving it a total loss. 

The man wanted the car covered to its agreed value of $105,950, under a policy he bought the same day as the fire.  

Allianz initially agreed but its investigation found the man had wrongly described the model at the policy’s inception. He listed it as a more expensive 2013 Range Rover Autobiography MY14.5.  

The insurer offered to settle the claim under a revised value of $66,630. It deducted remaining premiums and excess, leaving the payout at $58,979.

The owner said that when he had searched the insurer’s website using his car’s registration, it provided a model with an outdated engine. He said he selected the Autobiography MY14.5 model because it had a similar engine type to his car.  

“I simply selected the only option with my engine that had the MY14.5 badging ... the website labelling was wrong and deceived me,” he told the complaints authority.  

AFCA says the policyholder’s “innocent misrepresentation” of the vehicle’s model breached the policy terms.

“I accept the complainant’s position that he searched for his car on the insurer’s online policy site and believed he could not find his car described,” an authority ombudsman said. “However, that does not entitle the complainant to misrepresent his car as a different specification.”

AFCA says the man should have made “further enquiries of the insurer to see if it is willing to offer insurance for the car and, if so, on what terms. The insurer relies on the complainant’s accurate description of the car when it agrees to offer insurance.”

The authority’s dispute ruling accepts Allianz is entitled to change the settlement amount under a common law precedent, and its reduced offer is fair.

Click here for the ruling.