Undisclosed debt agreement results in rejected insurance claim

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The insured claimed for damage to her car following an accident in March last year. After buying her policy in i2018, she renewed it in i 2020. The client had entered a debt agreement on January 31, 2019 but failed to disclose it to her insurer at renewal.

The insurance company rejected her claim, saying it learned only recently she had a debt agreement and would not have re-issued the policy if it had known.

The insured alleged that she was not asked whether or not she had entered a debt agreement when renewing her policy but the Australian Financial Complaints Authority (AFCA) determined that the insurer had reasonable grounds to deny the claim due to the non-disclosure of information by the complainant. 

The AFCA found evidence from which it appeared that the insurer informed the complainant of her duty of disclosure on policy renewal in a clear manner.

According to AFCA , “Section 21 of the [Insurance Contracts Act] provides for the insured’s duty to disclose every matter known to the insured that the insured knows to be a matter relevant to the insurer’s decision to accept the risk”.

The complainant said the insurer did not ask her specific questions about her financial position and was unaware of her need to inform the insurer that she had a debt agreement.

“I acknowledge that the complainant says that the insurer should have specifically asked her about her financial position during phone calls, however, the insurer is not required to do this.” AFCA said

The certificate of insurance required that the insured confirm that she was not currently bankrupt or subject to a debt agreement. The AFCA states that the complainant “provided no information to indicate a change in the matter”.

The insurer said that it was prejudiced by the fact that she withheld information about her debt agreement, and would not have renewed her policy had she informed them of this.

The insurer had to refund the complainant's premium for the policy period that commenced from her renewal if it had not done so.

Published:Wednesday, 25th May 2022
Author:

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

Understanding the Rise in Strata Insurance Premiums Amid Climate Challenges

12 Apr 2026: Paige Estritori

In recent years, Australia's strata insurance market has experienced notable shifts, primarily driven by escalating climate risks and increasing claims costs. As we move through 2026, these factors continue to influence premium rates and underwriting practices, presenting challenges for owners corporations and strata managers. - read more

Deloitte's Vision: Navigating Australia's Insurance Landscape in 2026

12 Apr 2026: Paige Estritori

As the Australian insurance sector approaches 2026, Deloitte has released a comprehensive report detailing eight pivotal predictions that are set to reshape the industry. These insights provide a roadmap for insurers to adapt and thrive amidst evolving challenges and opportunities. - read more

APRA Highlights Increase in Intermediated General Insurance Premiums

12 Apr 2026: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has released its latest statistics, indicating a notable increase in general insurance premiums placed through intermediaries. This trend reflects the dynamic nature of Australia's insurance landscape and offers insights into the sector's current trajectory. - read more

Deloitte's Forecast: Key Insurance Trends for Australia in 2026

12 Apr 2026: Paige Estritori

As the Australian insurance landscape continues to evolve, Deloitte has released its 2026 Insurance Predictions, highlighting pivotal trends that are set to reshape the industry. These insights are particularly relevant for self-employed professionals seeking to understand how these changes may impact their coverage options and risk management strategies. - read more

Strengthening Australia's Fuel Security: Government Empowers Export Finance Australia

12 Apr 2026: Paige Estritori

In a strategic move to bolster national fuel security, the Australian government has announced amendments to the Export Finance and Insurance Corporation Act. These changes grant Export Finance Australia (EFA) enhanced authority to underwrite additional cargoes of critical imports, including fuel and fertiliser, addressing challenges posed by escalating risk premiums that have been affecting independent importers. - read more

Click for more Insurance News

Car Finance- Quick & Easy

If you are in the market for a new or used car, then we're in the market to help you arrange the money. Our car loan & leasing finance service is backed by a national panel of car loan specialists who will establish your eligibility, find lender/s offering the best deals for your situation - and help you through the approval and settlement process. No charge to you - and no obligation to proceed with any recommendations offered.

... start your car loan here ...