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
Source:

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Federal Court Denies Truck Driver's Insurance Appeal

25 Feb 2026: Paige Estritori

In a recent legal development, the Federal Court of Australia dismissed an appeal by Bradley Henschke, a logging truck driver, concerning his insurance claim against the Australian Retirement Trust. The court's decision, delivered on February 12, 2026, underscores the critical importance of active insurance coverage for workers in high-risk occupations. - read more

Heightened Road Risks Amid Holiday Freight Traffic Surge

25 Feb 2026: Paige Estritori

As the Australian summer holidays approach, insurers and transport specialists are raising alarms about increased road risks due to the convergence of peak freight activity and heightened passenger vehicle travel. This period traditionally sees a surge in both freight movements and family road trips, leading to congested roads and a higher potential for accidents. - read more

InfoAgent Launches Advanced Vehicle Data Services for Heavy Trucks

25 Feb 2026: Paige Estritori

Australian vehicle data provider InfoAgent has unveiled two innovative services designed to deliver accurate and detailed information for heavy commercial trucks and trailers. These services aim to address critical challenges in industries such as insurance, roadside assistance, fleet management, and logistics by simplifying processes and enabling better decision-making. - read more

Rising Insurance Premiums: A Growing Concern for Australians

25 Feb 2026: Paige Estritori

In recent times, Australian consumers have been grappling with substantial increases in insurance premiums, prompting widespread concern and scrutiny. Reports indicate that some policyholders have experienced premium hikes ranging from 30% to 50%, with certain cases witnessing even more significant surges. This trend has raised questions about the affordability and transparency of insurance pricing in the country. - read more

Navigating the Surge in Insurance Risks for Australian Businesses

25 Feb 2026: Paige Estritori

Australian businesses are currently grappling with a complex landscape of escalating insurance risks, driven by factors such as increased litigation, rapid technological advancements, supply chain disruptions, catastrophic events, and geopolitical tensions. These challenges necessitate a proactive approach to risk management and insurance coverage. - 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 ...