A complainant who had his claim denied after failing to provide additional information relating to licence suspensions will be covered for his losses after a dispute ruling found in his favour. 

The driver lodged the claim in July last year after his vehicle had been damaged, but the claim was declined by Eric Insurance and his policy cancelled.

The insurer alleged the claimant had breached his duty of taking reasonable care not to make a misrepresentation, after he failed to detail several licence suspensions in the five years before the policy was incepted in February last year. Eric Insurance says if it had known of the complainant’s driving history, it would not have offered him a policy. 

The policyholder challenged the insurer’s allegations, saying he had answered questions relating to his driving history appropriately and had not made a misrepresentation.

He says he had applied for the policy online through his mobile phone and answered the questions within the available space on the device.

Records show that the insured had answered “yes” to a question asking him if he or anyone who was likely to drive the car had their licence suspended, cancelled or had a good behaviour period imposed within the last five years.

The Australian Financial Complaints Authority (AFCA) observes that after answering “yes” to the question, a further box appears to allow the would-be policyholder to give further details about the suspension, which it says the complainant had done. 

However, Eric Insurance says that the claimant should have ticked a box with the words “include another licence event?” and provided information on two more licence suspensions that were imposed within the previous five years.

But AFCA said nowhere in its system did the insurer ask the complainant if he had disclosed all suspensions and instead allowed him to purchase the policy. 

The ruling acknowledged Eric Insurance’s reference to Section 20B of the Insurance Contracts Act 1984 (Cth), which requires the insured party to take “reasonable care to not make a misrepresentation” but says the act stipulates that a policyholder’s failure to answer a question is not enough to entail a “misrepresentation”. 

“The complainant’s failure to answer the second question (by not checking the box) is not, by itself, enough to show the complainant made a misrepresentation,” AFCA said.

AFCA notes that the insurer had set up a phone call with the driver shortly after the policy was taken out, in which they could have ensured that they had received all information about his previous driving history. 

“The insurer had the opportunity (both online and on the phone) to ask the complainant how many licence suspensions or events he had or ask if he had disclosed all licence suspensions or events or something similar,” AFCA said. “It did not do this”.

The determination required the insurer to reinstate the policy if the complainant accepted paying the applicable premium, and accept the claim.

Click here for the ruling.