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Insurer's Denial Upheld for 'Reckless and Unsafe' Driver

Insurer's Denial Upheld for 'Reckless and Unsafe' Driver

A recent appeal by a driver involved in a single-vehicle accident has been unsuccessful in overturning his insurer's claim denial.
The insurer cited exclusions related to the driver's reckless driving and an unroadworthy vehicle as the basis for their decision.

The driver, who was operating a 2020 BMW X4, stated that the accident occurred at approximately 8pm on May 22nd of last year while he was attempting to navigate a bend in the road. According to the driver, he lost control of the vehicle and collided with a tree due to being startled by the bright lights of an oncoming vehicle.

Initially, Blue Zebra, the insurer, notified the insured that his claim had been approved and would be assessed as a total loss. Approval was granted for the purchase of a new vehicle for the claimant pending an interview with the driver about the accident, as well as approval from the vehicle's financier. The purchase was based on a $197,214 quote provided by the complainant.

However, despite still awaiting further claim information, Blue Zebra proceeded to place an order for a new vehicle, as it was estimated that the replacement would take about ten months to arrive. However, on August 8th, the insured informed the insurer that he had placed an order, which included a $2000 deposit, with another dealership and expected to receive the vehicle by the end of the month.

Safety Issues and Reckless Driving

An insurer-appointed motor vehicle investigator, referred to as AM, reported significant safety concerns regarding the insured vehicle at the time of the crash. These concerns included unroadworthy tires and disabled stability controls.

The investigator also noted crash data indicating that the driver was traveling 12km/h above the speed limit and took deliberate actions to increase speed moments before the accident. According to AM, the vehicle was being driven in an enthusiastic and reckless manner, exceeding the speed limit and with disabled stability controls.

Claim Denial and Disputes

Following an interview with the complainant regarding the accident, Blue Zebra denied the claim, stating that exclusions related to the vehicle's unsafe and unroadworthy condition, as well as the insured's wilful and reckless use of the car, were applicable.

The insured, however, maintains that the car was in pristine condition before the accident, having received appropriate servicing and driven only 19,000km in total. He denies any knowledge of issues with the tires and asserts that he would have addressed them if he had been aware.

Moreover, the driver disputes the accusation of driving recklessly, emphasizing that he would not have endangered himself or his son, who was a passenger at the time of the accident.

Ruling of the Australian Financial Complaints Authority

The Australian Financial Complaints Authority (A.F.C.A.) reviewed the evidence presented by both parties and concluded that the insurer was justified in denying the claim. A.F.C.A. accepted AM's report, which unequivocally established the unroadworthy condition of the vehicle, thereby contradicting the insured's assertions.

The ruling also took into account the insured's admission of driving above the legal speed limit, despite being unfamiliar with the road. Therefore, A.F.C.A. agreed that the insured was likely driving in a wilful and reckless manner immediately prior to the accident.

A.F.C.A. did, however, determine that Blue Zebra should compensate the insured for the financial losses caused by the initial indications of claim acceptance. This includes reimbursing the $2000 deposit that the policyholder had paid.

Published:Tuesday, 21st Nov 2023
Source: Paige Estritori

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Subrogation:
An insurance carrier may reserve the "right of subrogation" in the event of a loss. This means that the company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party.