An Australian Financial Complaints Authority panel has backed an insurer’s decision to decline a business’ claim for damage to a Ferrari 448 that was crashed by a company director’s son. 

The director’s son, referred to as SA, lost control of the high-performance car and hit a utility pole on November 15, 2021. The car, which was insured for $390,000, was determined to be a total loss. 

Insurer SGUAS declined the claim on the basis the policy provided cover only for “authorised drivers”, which SA had not been. The policy defined an authorised driver as someone who held a full licence, was over the age of 30 and was listed on the policy schedule. 

The insurer denied the claim based on the age exclusion, because SA was under 30. 

SGUAS also raised concerns that the complainant breached its duty of disclosure and duty not to make a misrepresentation while renewing the policy. 

The claimant said SA had been misled by another party into driving, and he had no permission or authorisation from the company to use the vehicle. 

The complaints panel considered whether the loss could have been a theft, but says neither of the unauthorised parties intended to take the car permanently and SA appeared to believe he had permission to drive it.

The ruling also examines the claimant’s argument around section 54 of the Insurance Contracts Act (1984), which “says an insurer cannot refuse a claim in whole or in part by reason of some ‘act’ (which includes an omission) that occurs after the contract of insurance was entered into unless it can show: the level of prejudice sustained; or establishes this act could reasonably be regarded as being capable of causing or contributing to the loss”.

The panel says the “act” of SA driving the car “could reasonably be regarded as being capable of causing or contributing to the loss. The footage of the incident shows SA losing control of this high-performance vehicle with no external factors in play. By SA’s own statement, he was inexperienced and uncertain about the operation of the vehicle.

“Further, the panel agrees with the insurer’s submission that there is clear statistical data that shows young drivers are over-represented in motor vehicle deaths and accidents due to their inexperience and decision-making ability.

“In this regard, the panel accepts there was a greater risk an accident would occur if a high-performance vehicle was being driven by someone under 30 compared to someone over 30.”

Click here for the ruling.

From Insurance News magazine: Why lithium-ion batteries pose such a powerful problem for insurers