FSCL Case Study

A client, with the help of a broker, arranged insurance for herself and her daughter to drive a work vehicle. The woman was aware that her daughter had a couple of issues in the past and wrote on the insurance application form that she:

  • had been involved in a car accident two years earlier and
  • had a drunk in charge of a motor vehicle conviction about six years before that.

She also answered “yes” to the question: “Ever had a Driver's Licence endorsed, suspended or cancelled?” but she answered “no” to the question: “Ever been convicted of a motoring offence?”

In addition, the daughter had been arrested while overseas with a small quantity of drugs in her possession. The client told the broker about the drug conviction but the broker said not to worry about it. The broker did not ask any questions about the issues disclosed on the application form, and neither did the insurer.

About two years later, the daughter was involved in an accident, took the car to a panel beater, had the car repaired and did not mention it to her mother. A couple of months after that, the daughter was involved in another accident. This time the panel beater called her mother and she agreed to pay the $400 excess and picked up the car.

The broker then called the client and said the insurer had found out that her daughter had five convictions, including:

  • excess breath alcohol in 2009
  • excess breath alcohol in 2010
  • driving while licence suspended and careless driving causing injury in 2015
  • careless or inconsiderate vehicle operation in 2015.

The broker said that if the client had disclosed this information, the insurer would have applied a $4000 excess and increased her premium. The woman asked the broker to put this in writing and waited for the letter to arrive.

Some months later, she was visited by a debt collection agent, wanting payment of $7200, being the two $4,000 excesses for each insurance claim, less the $400 excess already paid to have the car released.

The client was shocked. She did not know anything about the first accident. She felt her broker should have asked more questions when she first applied for the insurance. Unhappy with the broker’s advice, she asked the broker to contribute to the excess she was now having to pay. The broker initially offered $2100, because he had failed to advise her to disclose her daughter’s overseas drug conviction, but later withdrew the offer. The client referred the complaint to FSCL. 



The broker felt his position was clear. The client had failed to disclose her daughter’s convictions and it was her fault the insurer had increased the excess.

The client acknowledged that her daughter’s criminal record was more extensive than she had been led to believe, but said that if the broker had asked more questions about the information, she would have gone to her daughter and asked for further details. She felt the broker’s dismissal of the overseas criminal conviction, which the broker agreed he had dismissed, indicated that the conviction history was not as important as the insurer clearly considered it to be. 



FSCL discussed the complaint with the client, and she agreed that she should have asked her daughter for more detail and answered “yes” to the question about a conviction for a motoring offence. However, she felt the broker should also contribute to the loss. She said that if she had known the excess was going to be so high, it might have influenced her decision about allowing her daughter to drive the vehicle.

FSCL then contacted the broker and asked whether he would be prepared to consider an early resolution to the complaint. We acknowledged that we were not yet in a position to issue a decision on the rights and wrongs of the situation, and that non-disclosure of criminal convictions is a serious matter, but asked whether, as a matter of expediency, he would be prepared to put an offer on the table. 



The broker offered, and the client accepted, $1200 in resolution of her complaint.

Dec 2019

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