A woman issued a non-renewal notice by RACQ only six days before her motorcycle policy expired has won a dispute after she tried to claim for an accident but was told she had no cover.

The Australian Financial Complaints Authority (AFCA) determined RACQ had breached a rule that insurers must issue non-renewal advice a minimum of two-weeks before policy expiry.

The woman held a 12-month policy which expired on December 20 last year and was underwritten by RACQ and administered by an agency.

On January 15, she informed the agent of her accident and it arranged towing for the motorcycle that day. When she called to follow up on her claim, she was told the policy had expired.

The woman said she did not receive RACQ’s non-renewal notice and as it was sent in a COVID-19 environment and around the Christmas period, it may have been lost. She was not notified by email, she said, and the agent was still advertising the same type of insurance on its website.

She sought that RACQ repair her motorcycle or refund all premiums she had paid.

RACQ declined her claim, saying she was given prior notice in December that it would not be inviting renewal and her policy had duly expired.

The notice told the woman her cover expired at midnight on December 20 as RACQ was no longer underwriting policies for the agent.

“To ensure that you continue to have coverage for your vehicle you will need to make alternative insurance arrangements with the insurer of your choice before your policy expires. After this time, your vehicle will no longer be insured,” the notice letter said.

AFCA said she “was given the non-renewal notice … eight days less than the minimum 14 days required” before the old policy expired and this did not satisfy section 58 of the Insurance Contracts Act 1984.

Although RACQ’s agent sent the notice on December 3, the Act presumes an item sent by post would be received by its addressee on the ‘seventh working day’ after it was posted, excluding weekends and public holidays. December 3 was a Thursday, so the ‘seventh working day’ fell on Monday December 14 – only six days before the December 20 expiry of the RACQ policy.

“This means a statutory policy on the same terms as the old policy was in place at the time of the complainant’s loss. The insurer must attend to her claim under this statutory policy,” AFCA ruled.

AFCA explained that if an insurer fails to comply with section 58, and no alternate cover is taken out before the policy expires, a policy comes into force for a further 12 months or until the policyholder takes out alternative cover, whichever happens first.

This policy would be based on the same terms as the expired policy and there is no obligation to pay premium for the cover, unless a claim is made.

As RACQ failed to comply with that section, the woman’s statutory policy was in place for 12 months on and from December 21.

“This determination is in favour of the complainant. The insurer is to take the relevant steps to attend to and assess the woman’s claim under the statutory policy. A statutory policy on the same terms as the old policy was in place at the time of the woman’s loss,” AFCA said.

RACQ was told to assess if her loss would be covered under the terms of the statutory policy and, if so, make a deduction for premium based on the formula set out in section 58 of the Act.

See the full ruling here.