A Youi policyholder has secured an increased payout after a dispute over a caravan damage claim, despite failing to complete repairs after a previous cash settlement.

The woman lodged the latest claim, under a policy with an insured value of $13,024, when a tree branch fell on the vintage vehicle.

Youi accepted it and said the caravan was a total loss, meaning the settlement would be the lower of the market value or the insured value.

It offered $5400 cash, which was the caravan’s market value of $10,000 minus the cost of repairs that the owner did not complete after an earlier 2017 claim was cash settled for $9295.

Youi applied a 50% depreciation to the 2017 cash settlement, amounting to $4648.  

Photos showed damage to the caravan’s side and rear, unrelated to the claim for the fallen branch.

The caravan owner turned to the Australian Financial Complaints Authority, arguing Youi did not inform her of deductions for unrepaired damage affecting future claims.  

AFCA says Youi was entitled to factor the unrepaired damage into the second settlement – but only up to $2000.

“I consider it is fair for the insurer to apply a $2000 deduction from the market value of $10,000 to allow for this. A reduction of this value by almost half purely to allow for some cosmetic damage could be considered somewhat excessive,” AFCA’s ombudsman said.  

“The insurer’s liability is capped to $8000 ... The insurer has not adequately explained why a 50% depreciation on a previous claim settlement would fairly reflect the extent of the impact it would have.”

The caravan owner did not have a receipt for 2017 repairs completed and could not confirm what amount she spent, but said she was advised it would be “too risky” and “opening a can of worms” to finish the job owing to the caravan’s vintage nature. Instead, she completed maintenance and upgrades that she felt maintained the value.

She said that had she known the insurer would apply a deduction for unrepaired damage to any future claim, she would have either reduced the sum insured or changed insurer.

AFCA has ruled out compensation for non-financial loss, saying the policy clearly stated the caravan’s condition would be taken into account when considering market value.  

“I am not persuaded the information shows the insurer misled the complainant,” the ombudsman said. “Nor am I persuaded the insurer caused her undue stress or inconvenience through its actions.”

See the ruling here.