A driver whose car rolled down a cliff after his handbrake failed to hold has won his claims dispute after the Australian Financial Complaints Authority (AFCA) rejected his insurer’s allegations that the claim was fraudulent.

The complainant lodged his claim on October 24 last year, after his vehicle was wrecked beyond repair on the same day.

The man said he had noticed steam coming from his vehicle’s bonnet and decided to stop the car on the road by a steep cliff to investigate the smoke. The driver left the car in drive and engaged the handbrake, but it failed to hold, causing it to roll off the sharp dirt road and down the hill.

IAG denied the claim, saying that its investigations showed the incident was not accidental and was intended to “deceive the insurer in order to obtain a financial benefit” in direct breach of the comprehensive car policy’s terms.

The insurer said the claimant was motivated to plan the crash by the vehicle’s insured value of $38,400, being far higher than the vehicle’s market value, which it alleged was $27,100.

It determined the estimated market value price from observations of three examples from car valuer Glass’s Guide and provided an assessor’s estimate of the vehicle’s value, but did not supply a copy of its report.

IAG also provided evidence that the complainant attempted to sell the vehicle a month before the crash, with the highest bid being $11,500.

The claimant initially denied he attempted to sell the vehicle before later admitting to it. He said that the auction company responsible for the sale was incompetent, which was reflected in the bid price.

AFCA said it could not determine if the car was over-insured based on observations from Glass’s Guide, which it observed to be outdated with vehicle costs rising in a covid market.

It said given the severity of the allegation, IAG should have provided the hearing with a copy of the assessor’s report; and challenged the significance of the auction.

“The auction result is well below the insurer’s unsupported view of the market value, which in my view supports the complainant’s position that the auction company were not up to standard,” AFCA said.

The ombudsman identified that the complainant had the opportunity to commit a fraudulent act, given the isolated area where the incident occured, but said the insurer would have to rely on other factors to prove its allegations.

It noted that the complainant provided inconsistent recollections of the incident but said the differences were not of “enough significance” and understandable given that the event occurred in a “short space of time and would have been extremely traumatic”.

An IAG-appointed forensic expert reported that the complainant’s actions before the crash were “very questionable and extremely doubtful”, saying that tests to recreate the accident were inconsistent with the driver’s account.

The claimant said the expert’s testing had been inaccurate because he placed the vehicle in an incorrect position.

AFCA observed comments from the expert that he was unaware of the precise location of where the vehicle first rolled downhill, which it said was of “significant importance to the accuracy of the complainant’s statement”.

It said the expert’s report had been “thorough and logical” but that the claimant raised important challenges to the insurer’s assertions.

“Given the serious allegations being made by the insurer, I cannot be satisfied to the required degree that the insurer has met its onus to establish that the complainant has not been truthful and frank in statements made regarding the claim, or that the claim is fraudulent,” the ombudsman said.

The decision required IAG to accept the claim and remove references to fraud from the insured’s records. The ruling did not require the insurer to compensate the complainant with non-financial losses, saying the crash circumstances warranted investigation.

Click here for the ruling.