A New Zealand driver who falsely claimed pre-existing damage to his vehicle was caused by floods in Auckland may have his home loan withdrawn by his bank because he has been blacklisted by insurers and cannot get house and contents cover. 

The motorist lodged a claim after the January 23 2023 flood disaster, providing a quote from a mechanic for the cost of repairs.  

His insurer wrote the car off and notified the transport agency to deregister it. When the man then withdrew his claim, saying he had fixed the car himself and needed it for work, the insurer investigated. 

It found the mechanic’s assessment was undertaken 10 days before the flood and the damage was inconsistent with flooding and more likely caused by wear and tear. 

When the car owner refused to co-operate with the investigation, the insurer put a flag on the Insurance Claims Register (ICR), which led to another insurer cancelling his house and contents policies. 

The driver then admitted lying about his car damage as he sought to have the ICR flag removed. As a result, the flag was changed to show the reason his claim was declined was fraud.  

The motorist complained to the Insurance & Financial Services Ombudsman Scheme, saying his insurer lacked empathy because he was going to be ruined financially. 

Ombudsman Karen Stevens says the case serves as an important lesson for consumers, because the driver is unlikely to get cover from any other insurer now. 

Insurers have the right to cancel a policy and put a flag on the ICR if they have been deliberately misled, she says. 

“It’s vital to always tell the truth to your insurer, as the consequences are just not worth it,” Ms Stevens said. “Insurers have clear policies regarding fraud, and it makes no difference if someone withdraws their claim or apologises for making a false statement.

“People don’t realise that if they are flagged on the ICR, the policies they hold with other insurers can be cancelled too, and all insurers will steer clear of giving them any new insurance from that point on.” 

The ombudsman scheme says many consumers are unaware insurers share information, and is warning people of the importance of honesty when making claims.