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Motor policy wordings cause excess confusion

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A significant number of motor insurance disputes over the application of excesses have been lodged with the Australian Financial Complaints Authority (AFCA), and consumer groups say variations in wordings are causing confusion.

In many of the complaints, claimants do not agree with insurers’ decisions to apply an excess when they are not at fault, but have been unable to provide the contact details of the parties that caused the collision.

Comprehensive motor policies vary, but it is not unusual that some conditions must be met before an excess is waived.

Most of the time, if a claimant proves they are not at fault and has supplied the insurer with the details of the other party, they won’t have to pay the excess. But insurers handle the issue differently and the exact circumstances of an accident can be difficult to prove.

AFCA says every dispute it oversees is decided based on “what is fair in all the circumstances”.

“In all cases, we will look at the facts of the particular dispute,” Lead Ombudsman for Insurance John Price told

“Subject to the policy terms, if a person is not at fault and has made all fair and reasonable efforts to identify the at-fault party, we would not expect an excess to be paid.”

Figures made public by AFCA do not provide for a breakdown of motor disputes according to specific issues. But a search of the keywords “motor excess” for published determinations of comprehensive motor insurance disputes since October 1 last year returned at least 40 results.

In one example, AFCA sided with a Suncorp decision to apply the $650 policy excess on the basis that the claimant was either wholly or partially responsible for a collision in January last year.

Suncorp had accepted the claim for damage sustained on the 2008 Ford Focus, which it assessed as a total loss, and paid the agreed value to settle the claim. But the claimant did not agree the excess should be applied, arguing he did not cause the collision.

AFCA ruled Suncorp had acted in accordance with the terms stated in the product disclosure statement (PDS).

“There is no dispute that the complainant was unable to provide full contact details of the [third party], and those he was able to provide he believes are likely to be false,” AFCA said in the determination.

“The PDS is clear in stating that not only must the insurer agree the complainant was not at fault for the collision, but that he must provide the name and address of the person who is, as well as the registration number.”

In another dispute, AFCA’s ruling went the way of a claimant who did not agree HDI Specialty SE should apply the policy excess. The claimant said he did not cause the collision, which occurred at a roundabout when the third party driver changed lanes and hit the rear section of his vehicle.

HDI initially accepted the complainant’s version of events that he was not at fault but later found it could not conclude the claim was entirely the fault of the third party, and subsequently decided to apply the excess.

AFCA agreed the insurer has the discretion to determine who was at fault but says in this case, the decision was not fair.

“I do not consider it was fair in all the circumstances for the insurer to hold the complainant partly at fault for this collision and apply the excess,” AFCA said. “The insurer is therefore required to refund the excess to the complainant.”

The Financial Rights Legal Centre says variations in wordings across insurance policies continue to cause confusion for consumers.

“Many consumers assume that all insurance policies have ‘no excess’ payable where they are not at fault. This is not the case,” Director of Casework Alexandra Kelly told

“Until general insurers can be clearer in their PDS and advertising material about what a ‘not at fault claim’ is or where an excess is payable, consumers will continue to be confused.”

Click here for the Suncorp ruling and here for the HDI Global outcome.