A woman who says Suncorp was wrong to pay her husband, who she was divorcing, $14,000 after their 2013 Kia Optima was assessed as a total loss has lost a claim dispute.

The woman went to the Australian Financial Complaints Authority (AFCA) seeking $14,700, which was the insured value of the car, plus compensation for time spent without a vehicle and a refund of all insurance premiums.

The woman said the car was purchased with money that would otherwise have been paid to her as part of a divorce settlement.

To agree to her demands, AFCA said it would have to determine she was solely entitled to the claim settlement and her husband was not entitled to any part.

It could not do that without her husband’s involvement but he was not a party to the complaint and so AFCA could not compel him to provide documents or answer questions.

AFCA ruled the fairest way for the dispute to be resolved was “as part of the divorce proceedings” and said Suncorp was not required to pay compensation or take any further action.

“The proceeds of the insurance claim can be considered in any court financial orders,” AFCA said.

“Without an agreement between the complainant and (her husband), or a court order, AFCA cannot determine whether one of them is solely entitled to the claim settlement, or whether each of them is entitled to part of the claim settlement,” the ruling said.

The woman lodged a claim after the car was damaged in a collision in late 2019. Suncorp assessed it as a total loss and calculated a claim settlement payment of $13,955 - $14,700, less the excess of $745 – which it paid to the husband, who later gave his wife $1970 but would not pay her the remaining $11,985.

AFCA said Suncorp mishandled the claim by paying the settlement to the husband without the wife’s consent and if it could not issue the settlement payment jointly, it should have obtained the consent of all insured parties, or a court order, before issuing the payment.

Suncorp said it wasn’t notified of any breakdown in the relationship or given any reason to review the policy, however the husband called Suncorp three weeks before the collision and said he and his wife were divorcing and the car was “going to be part of the divorce settlement”.

AFCA said this should have alerted Suncorp to the danger of paying one party without the other party’s consent.

“When a benefit under a policy is due to jointly-insured parties, and payment is not issued jointly, an insurer should obtain the consent of all jointly-insured parties before disbursing the benefit, unless there is a court order directing how the benefit should be disbursed,” AFCA said.

“In the absence of such an agreement or court order, an insurer that disburses a benefit to one jointly-insured party risks depriving another jointly-insured party of their entitlement.”

However, AFCA said there was no evidence the woman suffered a loss due to Suncorp mishandling the claim and so Suncorp was not required to pay her compensation.

The evidence did not show that she was entitled to the claim settlement payment and her husband was not.

“The complainant says Suncorp should have paid the claim settlement to her, not (her husband). However, if Suncorp had done this, (her husband) may have complained that the claim settlement should have been paid to him,” AFCA said.

The woman told AFCA she bought the Kia, though during a phone call to Suncorp in April 2019 she said her husband was buying the car, which was registered in his name from that time.

The woman said she paid for the insurance, though no documentation showed this and her husband indicated during a phone call with Suncorp that he alone paid to insure the car.

“The complainant says she was the sole owner of the car and was solely entitled to the claim settlement however the available information does not show this. The available information indicates (her husband) had an interest in the car and may be entitled to all or part of the claim settlement,” AFCA said.

The woman also provided a document dated almost three months before the car was written-off saying she was willing to accept the car as part of a divorce settlement, though this was only signed by herself and AFCA’s ombudsman said it did not indicate that her husband bought the car as part of a settlement, or that he agreed to relinquish ownership.

See the full ruling here.