A jet skier who was involved in a collision and had his insurance claim for watercraft damage denied because his blood alcohol content reading exceeded the legal limit has won his complaint against the insurer.

The Australian Financial Complaints Authority (AFCA) says NM Insurance cannot invoke its “under the influence of alcohol” policy exclusion to deny the claim without providing evidence to prove the jet skier was affected by his consumption of alcohol before the collision in December 2017.

The ruling is made on similar grounds in another case involving Hollard, where the motor claimant won despite breaching the legal limit for blood alcohol content.

In this latest dispute NM Insurance had relied primarily on the outcome of police charges against the jet skier to conclude it was entitled to rely on the exclusion to deny the claim made under his watercraft insurance policy.

AFCA says it is important to make the distinction between having a blood alcohol reading over the legal limit, and being “under the influence of alcohol”.

“While the evidence supports a conclusion the complainant’s blood alcohol content was above the legal limit, no information has been provided which establishes, on balance, the complainant was ‘under the influence of alcohol’ at the time of the accident,” AFCA ruled.

"Section 54 of the Insurance Contracts Act 1984 limits an insurer’s ability to deny a claim in certain circumstances and applies to assist the complainant in this case.

“The insurer has not shown that the complainant was under the influence of alcohol, or that alcohol caused or contributed to the accident. It cannot rely on the policy exclusion to deny the claim.”

The jet skier admitted he drank before riding on his craft and was later charged by police for dangerous operation of a personal watercraft and operating it while under the influence of alcohol. At the hospital where he was treated for his injuries, a test of his blood returned an alcohol reading of 0.06g, exceeding the legal limit of 0.05g.

He was put on a good behaviour bond after pleading guilty to the charges in court.

The AFCA ruling notes that the jet skier had provided to the court statements from two friends who were with him on the day of the accident. One of them says the jet skier appeared sober and unaffected by alcohol immediately prior to the collision while the other says he was “travelling at some speed” at the time of the accident.

The person whom he collided with, who is also his friend, told the court he accepted full blame for the accident.

AFCA also pointed out the jet skier had provided his own blood alcohol test report, which showed a reading of 0.047g, lower than the results taken at the hospital and below the legal limit.

While the accuracy of the jet skier’s own test results were not assessed, AFCA says this is because he chose to plead guilty to the police charges and the sentencing was therefore based on the police summary.

“The complainant accepted the blood alcohol reading alleged by the police in entering a guilty plea, although there does appear to be some uncertainty about its accuracy,” AFCA said.

“It is clear from the recording of the court’s interactions with the police and the complainant that the court considered the possibility that the blood alcohol reading provided by the police might not be accepted if that evidence were tested in court, given the evidence of an inconsistent reading in relation to the same sample of the complainant’s blood, produced by the complainant.

“The court also appeared to accept the assertion from [his friend] that it was he, and not the complainant, who was responsible for the accident. This suggests that it was possible the complainant may have established such matters after a full hearing in the court.”

“On that basis, the panel is not satisfied it is fair or appropriate to accept the fact of the guilty plea by the complainant as establishing that either the complainant accepted, or the court had determined, his blood alcohol reading was actually above the legal limit or that he was operating the [personal watercraft] in a dangerous manner,”

An insurance lawyer, who spoke on the condition of anonymity, says the ruling is a further reminder to insurers that “unless they are able to show actual influence by alcohol, they are not going to be able to safely rely on the exclusion”.

“In this case he crashed his watercraft at a beach and it’s probably harder to prove than in a pub or a public place,” he told insuranceNEWS.com.au.

Another insurance industry source told insuranceNEWS.com.au that insurers may consider rewording exclusions as a result of the AFCA rulings. It is not practical for insurers to prove that alcohol caused or contributed to each accident where a claimant is over the legal limit, he said. 

Click here for the ruling.