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Theft claim denied after man insured car in father's name

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A man who insured his BMW X5 in his father's name for $39,000 via a broker has lost a claim dispute after the duo reported the car stolen.

The father held a comprehensive motor vehicle policy with IAG insuring the 2010 vehicle for accidental loss or damage, including theft. He lodged a claim in March last year, saying the car was no longer on a street where his son parked it a month earlier.

IAG rejected the claim, saying the father – who had not contributed to the cost of the car and didn't drive it - had no insurable interest in the BMW and suffered no pecuniary or economic loss because of the claimed theft.

IAG also said the claim was fraudulent.

The son, who had been convicted of several serious crimes and extensive driving offences, allegedly misled IAG about the cost of the vehicle, saying he paid $43,000 when the previous owner revealed the actual sale was for $30,000. The purchase price recorded on the certificate of registration was $5,000.

The Australian Financial Complaints Authority (AFCA) agreed IAG was entitled to deny the claim.

"The insurer did not refuse the claim because (the father) did not hold a legal interest in the vehicle or have equity in the vehicle. The insurer refused the claim because [the father] did not suffer a pecuniary or economic loss because of the claimed theft,” AFCA’s ruling says.

“There is no suggestion [his son] borrowed any amount from [his father] to pay for the vehicle. The information shows [the son] is the legal owner of the vehicle."

The son bought the car in May 2018, paying for it and registering it in his name. Insurance cover was arranged through a broker who managed all the son’s insurance. The son said he was unsure why the policy was placed in his dad's name, although he said the broker had received media attention for placing insurance with incorrect details to obtain cheaper premiums.

The son was not noted as a driver in the IAG policy. The father was not noted as having any interest in the BMW, which was bought with only a single key.

“Although [the father] said he has use of the vehicle, the available information indicates he did not use the vehicle. He could not explain how he would access the vehicle or provide a reasonable description of the vehicle condition,” AFCA said.

The son said he last drove the car on February 23, 2020 and parked it in a street near his home. The next day, he travelled overseas until March 11 2020, and then remained in isolation due to COVID-19 at his parent's home for two weeks. On March 26 2020, he discovered the car missing and reported the loss to IAG the same day, and the police the following day.

IAG’s forensic locksmith said the car could not be easily started without a correctly coded key. The vehicle was most likely last driven February 24 2020 - the day after the son said he last drove it - for a short duration at low speed and there was a power issue and the battery was depleted that day, the locksmith determined.

Banking records requested by IAG were not provided and AFCA’s ruling says the son, who had a second vehicle - a Toyota on which he had paid down a $53,846 loan to $27,786 - may have been seeking a monetary windfall.

“The failure to provide the financial documents raises concern as to the complainant's financial position. The forensic report identifies some electronic code issues with the vehicle and it is clear the vehicle was surplus to [the son’s] needs. I accept in the circumstances that a potential financial motive could exist for the disposal of the vehicle,” AFCA’s ombudsman said.

AFCA said the son’s criminal history “raised issue” with his character and credibility and there were no witnesses to the theft or to confirm the vehicle had been left parked in the street as claimed.

“The forensic report confirms the vehicle was most likely last driven by a person who had access to the correctly coded key on February 24 2020, the day after [the son] claims to have last driven the vehicle. The key was still at the family home when [the son] returned from overseas,” AFCA noted.

"An opportunity exists for a person known to the complainants to have disposed of the vehicle with the complainant’s consent,” it said.

"There is a likely motive and clear opportunity to stage a theft claim. In my view the complainants have not established the vehicle was stolen as claimed,” the AFCA ombudsman said. “They have not established on the balance of probabilities, that the vehicle was taken without their knowledge or consent.”

AFCA said there was "serious concern as to the credibility of the information provided” and the men had not established a claim that fell within the terms of the insurance policy, and therefore it was not necessary to determine IAG’s allegation that the claim was fraudulent.

“The insurer is entitled to refuse payment,” AFCA said.

See the full ruling here.