Lloyd’s relied on a non-disclosure exclusion to decline cover for damage to a luxury car, but has been ordered by the Australian Financial Complaints Authority (AFCA) to settle the repair bill of more than $235,000.

The complainant company – a motor dealer – lodged a claim for the damage in July 2018, but when Lloyd’s reviewed the details it discovered the vehicle, a Bentley, was registered as “held for resale”. This had not been disclosed.

“The insurer relies on its policy exclusion to say [that] at the time of loss the vehicle was used in connection with the motor trade or on consignment for sale,” AFCA says.

But the complainant says the vehicle was purchased for personal use and not to resell.

It says any vehicle registered through the company has “resale” on its papers but that the car, bought through a Bentley dealer in July 2017, was for personal use and was garaged at home.

It accepts that the vehicle was advertised online but says this was “a test site and not for active trading”.

AFCA says it is hard to see why the vehicle would have been purchased as stock as “it is difficult to see any margin”, and that the damage occurred outside the house of a relative of the dealer.

“This suggests the vehicle was used for personal use. Stock is generally housed in a showroom to protect against loss.”

AFCA says having considered the information provided, “the panel is satisfied, on the balance of probabilities, that the vehicle was acquired for private use and not connected to the complainant’s vehicle-trading business”.

AFCA ordered Lloyd’s to settle the repair invoice totalling $235,304, and also to pay $1558 towards the complainant’s legal and professional costs.