A driver who wanted his insurer to repair his car and restore it to its pre-accident condition after a collision has lost a claim dispute because he failed to disclose pre-existing damage when purchasing a comprehensive motor policy six months earlier.

The claim was made after a collision with another car in November 2019, leaving the car a total loss.

When he bought his insurance policy in June of that year, the driver failed to disclose there was damage to his car. Suncorp declined his claim due to misrepresentation, saying if he had made this disclosure it would have offered Third Party Property Damage cover (TPPD) rather than a comprehensive policy. Suncorp offered to reinstate cover for TPPD.

While assessing the claim the insurer discovered the car's paint was in poor condition and there was hail damage on the bonnet and roof of the car.

The Australian Financial Complaints Authority (AFCA) ruled the car owner had not met his duty of disclosure at policy inception, and that Suncorp had shown it would not have offered comprehensive cover to him had the original damage been disclosed.

Suncorp had clearly informed him of the general nature and effect of his duty of disclosure on policy inception and in the policy documents it provided.

"The insurer has shown that it was prejudiced by the complainant’s non-disclosure. The insurer is entitled to decline the claim for damage,” AFCA said.

Further damage was caused to the car while in Suncorp’s holding yard. Suncorp paid $500 to address this, but AFCA awarded a further $1000 in compensation for Suncorp’s "error in not ensuring that the car was looked after while it was in its care”.

“I am satisfied that the information shows that the car is a total loss due to the previous damage and that the additional damage does not affect the salvage value of the car. However it is fair and reasonable that the insurer pays the complainant a further $1000 as compensation,” the ombudsman said.

AFCA also said Suncorp must refund premium back to June 2019 if it hadn’t already, though if the driver accepted the offer of TPPD cover Suncorp could charge the premium for that cover for the relevant policy period.

See the full ruling here.