Car Insurance Company Denying Claim Due to Undisclosed Licence Suspension

A friend had a car accident in his pride and joy a couple weeks ago (at fault) which resulted in approx $20K worth of damage to his car and the other car.
Was very unfortunate, the other car was speeding around a tight corner as he pulled out from the kerb, anyway, he accepted fault because at the end of the day, he felt he was in the wrong. - This is not the problem.

The problem is that his insurance company (Progressive) is refusing to payout for not disclosing a previous suspension. On his policy he stated he had no suspensions in the last 5 years, but he forgot about one that happened in 2014.

Before you jump to conclusions, the suspension was a mixup due to a unpaid $100 parking fine. When he became aware of the fine and suspension, he paid immediately back in 2014 to fix it up.

The insurance company asked him for a copy of his driving history, which he paid for and provided, didn't think anything of it, but now they have the evidence, and are saying it voids his insurance and would not have insured him if he had disclosed the suspension.

What are the options?

Comments

  • +2

    I’d love to hear the outcome,

    Many are siding with insurance company, I’m not. I quastion why the insurance company is so happy to take his premiums if person isn’t able to claim on it.

    Is the insurance company offering to refund all premiums paid?

    • +7

      I quastion why the insurance company is so happy to take his premiums if person isn’t able to claim on it.

      The insurance company took his premiums because he signed on a dotted line proclaiming he had no suspensions. What would you have an insurance company do when someone wants to sign up and declares a clean record?

      • -6

        If they are happy to check his record prior to a payout why aren’t they happy to check it upon signup? My point is, they are happy to take his money, but are not happy to pay out.

        • +5

          will you pay to supply your driving history report for each and every insurance that you've signed up ?

        • +5

          Customers have one important task and that is to answer all questions truthfully. Op’s friend failed to pay their fines after repeated notices and then failed to disclose that they were suspended.

        • @phunkydude: Um, yes? Why would I be with more than one car insurance? Why would I change it? There's no reason to change regularly. It already costs money to sign up for insurance, the only way to not pay anything is to not have it.

        • @Adonael:

          you'll change to other provider when you receive your renewal notice with increased premium for no reason

        • +1

          Don't be ridiculous. What an incredible waste of resources to background check every single application when there is a Duty of Disclosure on the customer?

          Does the ATO check every single deduction you've ever claimed? Or do they only start when you've got an unusually low taxable income for your occupation?

        • -3

          @Dan_:

          they are taking around $700 bucks every single year, so doing some pretty simple checks isnt exactly ridiiculous to me.

        • +1

          @cloudy:

          I hope you're not suggesting that insurance companies can get unfettered access to peoples driving histories?

        • @cloudy:

          Is it wrong for them to assume you're innocent and honest until proven guilty?

        • @whooah1979: Insurance companies should be truthful as well…

        • @Adonael: If you're willing to do that, why not obtain one anyway so you dont end up lying when signing up for the insurance policy?

    • The insurance company wouldn't have took his premium had he disclosed the suspension or increased his premium to match. It's a risk assessment the insurance company goes through. Why should the insurance company refund anything when they were being deceived?

      • Because they are not actually providing the product that was paid for. The legal contract becomes null and void, money gets returned and policy put in the bin.

        • If OP's friend hadn't had an accident by the end of the contract period he could claim 100% of his premium back by telling Progressive that he had a suspension? Is that what you are saying?

        • @DarkOz: No because he could not definitely claim that they would have denied a claim payout. In which case they would have delivered the service they were paid for, so there would be no grounds for a refund.

      • -1

        It's common bloody sense. You don't pay for nothing. If you're a tradesman and you get paid in advance to do a job, but you turn up and find that you can't perform the work, you don't get to keep that money, you give it back. This isn't a game of finders keepers. The insurance cannot cover him, therefore they cannot accept his money, even retroactively, therefore it must all be refunded. Do you understand or should I go find a 10 year old to explain it to you?

        • +5

          That all depends on why I can’t perform the work.

          As in this case you had deceived me by not disclosing an important clause in which prevented me from rejecting the work. Now that I had accepted the work in good faith and turned up to perform the work only to find out that you had lied in one of the important clauses. So I told you I can’t perform the work because of this and you want me to refund the money in full?

          Where is your responsibility and liability out of this? Who pays for my lost of earning if I don’t get paid when you were at fault? I hope you didn’t get your advices from 10 year olds as you seem to be acting like one.

        • @DarkOz: The business would have to provide a full refund minus any reasonable costs they incurred up to the point the job was cancelled.

          E.g. if you were paid in advance and drove there and found you couldn't perform the job for something that was disclosed incorrectly (that was reasonable to expect to be disclosed correctly) you would be entitled to claim petrol and vehicle wear & tear, and potentially for time driving. If this amount was less than the money received (and you would expect it to be) the remainder should be returned.

          If you had purchased a specific part necessary for the job that would be otherwise useless to the business or another customer (e.g. custom designed) you could charge for that part. If you purchased a part (say a generic white ceiling fan and you are an electrician that regular installs white ceiling fans) then you may not even be able to charge for that part as it is reasonable to expect that you could sell it within a reasonable timeframe to another customer and get your money back.

          You would not be entitled to charge for opportunity cost beyond time spent driving (e.g. you could not claim for the fact that you otherwise would have booked another job that afternoon but now are unable to do so, even though it may seem reasonable to do just that).

          Consumer law is very friendly to consumers in Australia.

        • @lghulm: I was simply answering to Adonael's ridiculous analogy where he said "but you turn up and find that you can't perform the work, you don't get to keep that money, you give it back. This isn't a game of finders keepers"

          I deal with trades people everyday so I think I am qualified to comment. Also I agree with you.

    • +5

      If you do Progressive's online insurance quote, as soon as you select that you have had a suspension they say they cannot offer you insurance due to the suspension.

      This means that they only gave OP insurance because he "forgot" about his suspension. It would be a bit different if they still would have given him insurance but at a higher rate, then they may be liable to pay out some of the policy, but in the case where he would have been immediately disqualified, then they can refuse the claim altogether.

      I get pretty tired of people complaining about insurance companies not paying out when in the end it's the policy holders mistake.
      Either because they just assumed they were covered for things that they actually aren't and never bothered to properly read the PDS, or because they made false claims when applying

      • +2

        So as Progressive wouldn't cover them in the first place, the OP 'friend' should get a full refund on all premiums paid to date.

        • Yes. And it will be like the policy never existed.

        • Yep, he should get it all back, looks like he will need it too if he has a 20K bill to pay!

      • Doesnt a service or product supplier have a duty of care to also ensure the correct product is being given? for example, I go to the counter in the store and purchase a TV for $1k. Take the box with no labels home and it turns out to be a bed head. I take it back to the store and they say, "too bad, too sad" you should've checked it was a TV now you are stuck with a bed head. The minimum the expectation would be that they checked the box before giving it to me and I check when I get home. Unfortunately in this circumstance the insurance company didnt check, the only difference between the TV and an insurance policy is the insurance policy is a deferred product and not immediate.

        • +4

          Your analogy is incorrect. In this case, it's the OP's friend asking for a bedhead (full insurance cover with a good driving history) when he really wanted a tv (cover after a licence suspension). OP's friend is at fault for not declaring the suspension, whether it was a trivial matter or not. Not up to the insurance company to read his mind and realise he really wanted a tv, which they don't sell.

  • +2

    I feel for your friend but rules are rules. As someone already mentioned that the insurance would have been rejected had your friend informed them of the suspension and thus there will be no claim to be rejected. Even if this is an honest mistake your friend needs to pay for his/her own honest mistake and not the insurance company.

  • the other car was speeding

    Op, does you friend have evidence to support this claim e.g police event number?

  • How did the insurance company become aware of the licence suspension?

    • +1

      Sounds like after the accident was reported (and perhaps because of the amount of the claim) the insurance company asked to see their driving history … to see if there was any way for them not to pay ;)

      Bullseye!

      • Is requesting driving history and denying the claim commonplace? I've Googled without much results.

        It would slow down a claim quite a bit if everyone had to supply this, and there would sure to be many complaints.

        • Insurance companies will find any reason to reject someone's claim, it's the name of the game. You sign up, they take your money, and depending on the company and the assessor they try to find a way to limit their liability. The assessor may even have kpis for all we know.

        • The only time I was 'put through the mill' was when my car was stolen from a remote bush car park at the entrance to popular hiking tracks.

          Police asked for phone records, and for all the keys I had to my car.

          Insurance wanted a copy of my driving record.

          Never been with a budget insurer though.

        • +3

          @photonbuddy: My car was stolen from my home and I was put through the ringer as there was little sign of forced entry (our flywire screen was slit, screen door unlocked via this (snib locked), and then main house door giggled to unlock because it wasn't dead bolted).

          Insurer requested phone records etc and referred me to their fraud department.
          I ended up with the insurer telling me they were denying the claim based on suspected fraud (they thought it suspicious I couldn't provide phone records despite the fact I was with Telstra pre-paid and Telstra denied me any access to those records!).. meanwhile the police had captured and were prosecuting a group of teenagers they had collared based on DNA evidence taken from my now (wrecked) car.

          Convo went: "we think you fraudulently had or claimed your car was stolen so are denying your claim", "yeah well the police do not agree with that and have found the people that stole the car" "well bad luck we make the decisions not the police" oh yeah okay, lets take this to social media, 5 minutes later "we have decided to payout your claim in full".

  • +3

    The insurer is trying to get out of claim with a technicality.

    The policy is void because of the failure to disclose the suspension, but one could possibly argue that the suspension wasn't a result of "moving" traffic offences (which increases the insurer's exposure).

    The suspension of licences due to unpaid fines is a really stupid law. It's not only driving fines that your licence can be suspended for - its any fine that goes to the NSW's SDRO.

    Cases like these are likely to be the unintended consequences of these laws that are not well thought out.

    • +8

      Suspension for unpaid fine is a fantastic law.
      The driver in this case didn't pay his fine, then had NUMEROUS letters to let him know he had a unpaid fine and letters to warn him this may result in suspension.
      He chose suspension then 'forgot' about it on his application.
      It is a harsh I agree but driver completely at fault. Disregard the law, pay the fine.

      • +3

        How do you know he chose suspension? Who choses suspension over 100 bucks? Thats pretty ridiculous. Likely OP is disorganised or change address without notifying or any other plausible explanation

        • +1

          Failing to notify a change of address is also an offence so that's not really going to help.

    • The suspension of licences due to unpaid fines is a really stupid law. It's not only driving fines that your licence can be suspended for - its any fine that goes to the NSW's SDRO.

      Suspending a licence or services is an effective method to ensure that customers pay their bills.

      The police may then enforce the suspension when they do an rbt or a rego check.

      • Fair enough for unpaid driving-related fines.
        But for anything else, it's a bit too much.

    • +4

      I agree that cases like this indicate the need for stringent regulation with regards to context in car insurance terms and conditions. My understanding is that The Australian Securities and Investment Commission (ASIC) and The Australian Prudential Regulation Authority (APRA) dictate that insurance companies are only allowed to take into account need-to-know factors that increase their "risk". The irony is that the government themselves will not include parking offences on your driving record, so if a government-led insurance scheme penalised you for late payment of tolls (which can also lead to licence suspension), it may be seen as persecution of the poor.

      I'm not saying I know where to draw the line but if no one complains we won't have a line. Imagine applying for a job at a school and failing a working with children check because you were caught with insufficient balance on your Opal card 4 years ago…

      • I think they need to know about suspensions.

        Sure, it's a bit rough that they turf you out as soon as you tell them you have one, without bothering to ask what it was for, but that's a choice they made.

        I still don't get how people can just forget about these things. I mean, it's been 4 years, but what did he put down in 2015? Did he not apply for insurance that year?

  • +5

    Can he at least ask to have his insurance fees back as they wouldn’t have insured him in the first place?

    • Exactly what I was thinking, seems only fair.

  • +1

    Contact the financial services ombudsman they will be able to advise you.

    • +4

      http://www.lawaccess.nsw.gov.au/Pages/representing/lawassist...

      If you do not pay the full amount by the due date, or make arrangements with the Revenue NSW to pay by instalments, Revenue NSW can take enforcement action against you, including directing Roads and Maritime Services (RMS) to:

      -suspend your driver's licence
      -cancel any motor vehicle registration in your name.

    • +2

      100% would call bullshit if in Vic

      You can cry and call bullshit all you like in Victoria, but the same laws exist there if you don't pay your outstanding fines… You said you don't know the laws in NSW, but it seems you don't know the laws in Vic either…

      Unpaid fines in Vic…

      The Director, Fines Victoria can:
      * suspend or prevent you renewing your driver licence
      * suspend or prevent you renewing your vehicle registration
      * make deductions from your bank account, wages or money owed to you
      * charge and sell land that you own

      • +1

        I was aware of the threats of refusal of renewal, but not suspension.

    • +1

      Welcome to NSW, the land of revenue raising. They want their cash and will do anything to get it.

  • A friend

    We all know it was you O.P.

    • +1

      Lol, scouts honour, its not me :D

  • Any way to get the record expunged?

  • +5

    Thank you everyone for the feedback, and discussion on this.

    He is seeking legal assistance on the matter.

    A few notes for the record based on some of the questions and comments from others. The suspended license was as a result of an unpaid parking fine, nothing else. In NSW, Revenue NSW can direct the roads and Maritime Service to Suspend a license or cancel rego for anyone who has not paid amounts owing in full.
    From my understanding, they have offered to refund his premiums only since the last renewal.

    I will provide an update to what happens, permitted he is allowed to disclose and gives me permission to disclose.

    • +1

      I’ve had the same thing happen with an unpaid fine going to an old address leading to a unknown license suspension. There was laziness on my part I’m not updating my address but I think it’s an extremely nasty policy given it has the power to null your insurance and ability to drive, whilst potentially not being aware. In this case the driver was aware, but it still feels wrong to compare a driving suspension to a revenue suspension in terms of insurance. If legal avenues fail personally I would take to social media/aca etc and not let up on progressive as this doesn’t reflect well on them performing their duties to society.

      • +3

        By law you are required to notify of change of address within 14 days I believe, so you probably should consider yourself lucky you did not also receive a fine and demerit points for that. I can't see any real outs for his friend, he failed to live up to his responsibilities, the best he can hope for is a full refund from the last renewal point.

  • +1

    Maybe OP Mate upset the postie and he kept on tossing the reminders

  • +6

    Have your friend ask Progressive to refund all his policies to date, on the grounds that they were invalid, and cut his losses ..

  • Contact legalaid and ask them for an opinion. They'll be able to propose something without charging you anything in most cases. My personal opinion is that the insurer has a right to reject the claim, as "your friend" wilfully decided not to disclose information that's legally required to be disclosed. This basically nulls and voids the contract made with the insurer, so good luck.

    • +2

      Legal aid can be a great placr to get advice, however I would not be so sure that he was all that wilfully avoiding disclosure. Its an uphill battle to say the least, however if the judge thought it was unfair for the OP to be penalised for a suspension that was not driving related, I.e if he thought that and insurance company was acting unfairly because the only reason to ask that question is to find people with poor driving records and not necessarily just people who have some history of unpaid fines, then he may decide that the rejection is unfair in the first place. I guess my analogy would be if there was a question asking if someone was Asian, because we dont insure asians as they are bad drivers, then the question itself is unfair. If by answering yes the OP was being unfairly discriminated against, then there could be a case.

      Eithwr way he really needs to shop this around to some lawyers with experience in the area and see what they say. I would not take the cumulative word of this forum as the right answer. People in general are righteous and side with the "he made a mistake and therefore he should pay" mantra all the time even when there are clear legal questions to be answered. A lot of people get off a lot of situations all the time. Needless to say insurers are always trying to get off paying out and are often incentivised to try not to pay.

      • +1

        "he made a mistake and therefore he should pay"

        Which is the "a mistake" you're referring to? Ignoring the scores of letters demanding for the fine to be paid, which leads to his drivers license being suspended, or conveniently "forgetting" to disclose it to the insurer?

  • I assume they refunded all his premiums? If the contract would have never been entered into and was never going to pay they have to refund the premiums.

  • Ignorance is never an excuse, sorry.

  • +11

    This thread shows most people don't understand contract law. Your friend really has no recourse in this case. There are two broad kinds of non-disclosure in law - innocent, and fraudulent. If your friend had purposefully chosen to keep secret a material fact (licence suspension), then it's easy. What you're suggesting is that it was an innocent non-disclosure - i.e. they didn't disclose something because they felt it was unimportant or irrelevant. In such cases someone may still be covered. Here is a typical legal guideline:

    Consequences of innocent non-disclosure if the insurer would have accepted the risk

    The insurer cannot reject a claim on the basis of non-disclosure if:

    • the non-disclosure was innocent, and
    • the insurer would have accepted the risk and entered into a contract even if full disclosure had been made.

      However, if the insurer would have charged a higher premium or larger excess if full disclosure had been made,
      it can reduce the claim against that amount.

    Consequences of innocent non-disclosure if the insurer would not have accepted the risk

    The insurer can reject a claim on the basis of non- disclosure if:

    • the non-disclosure was innocent, but
    • the insurer would have rejected the proposal had it had the information.

    In this case, the insurer mentioned would easily be able to prove they would have rejected the insurance under disclosure, as that is their standard policy (they won't insure someone who has had a license suspension). In summary, although perhaps an innocent non-disclosure, your friend really has no case in this instance. At best, they may be able to claim some of their premiums back (although again, contract law varies, and they may be eligible for anything from all previous premiums through to premiums from the time of the contract being voided, depending on how they chose to pursue it). The cost of engaging a lawyer would most likely be more than a successful claim back of only a percentage of premiums paid.

    • While what you say is generally true, saying there is no recourse is probably not true.

      Possibly the best option is to get all the evidence, without embellishing any facts, and going straight to Progressive's social media and keep pushing the outcome of being insured with Progressive. There would be huge numbers of people that would not use Progressive if they knew that this was how they treated their customers.

      Is the person in the wrong, no doubt, but the discretion seems pretty small - so technically, legally Progressive may win totally in court (although I seriously doubt they would get away without paying out a percentage of the claim) but technically, legally people should probably avoid Progressive as an insurer and Progressive have a legal duty to fully inform all their customers that the tiniest, slightest error in the signing up form means they will take your money and never pay a cent.

      Also on the flip side, how many people have made an error in their form and not made a claim - Progressive should pay back every cent it ever took from any person that incorrectly filled out a form, ever. Perhaps the person should try to make a class action against Progressive on behalf of every single client they have ever had that made a single error on the signing up form for the full value of every premium plus court appointed interest.

    • Further, from the Progressive PDS for car insurance, https://www.pd.com.au/media/1006/progressivedirectmotorpds-f... page 44:

      "You must give us accurate and complete information
      Before you complete the purchase of your policy, and before each renewal, you have a duty of disclosure under the Insurance Contracts Act 1984. If we ask you questions that are relevant to our decision to insure you and on what terms, you must tell us anything that you know and that a reasonable person in the circumstances would include in answering the questions. You have this duty until we agree to insure you (for the initial purchase) or to renew the policy.
      Also, before a renewal, we may give you a copy of anything you have previously told us and ask you to tell us if it has changed. If we do this, you must tell us about any change or tell us that there is no change. If you do not tell us about a change to something you have previously told us, you will be taken to have told us that there is no change. You have this duty until we agree to renew the policy.
      If you do not tell us anything you are required to tell us, we may cancel your policy or reduce the amount we will pay you if you make a claim, or both. If your failure to tell us is fraudulent, we may refuse to pay a claim and treat the policy as if it never existed."

      As I thought, Insurance has different laws to standard contract law. Also read the last line, this seems to contradict Progressive's reason to reject the claim outright.

    • +2

      On the contrary you do not understand contract law.
      Where contracting is between two commercial entities the wording of the clauses dictate outright (provided it is within the laws of the state).
      Where contracts occur between consumers & commercial entities a further reasonableness test is applied.

      E.g. lets take an extreme case to prove the point.

      The insurer asks you to disclose the colour of the underwear you wear most often. You really like to wear red but you disclose black.
      Upon a claim an inspector comes to check your underwear drawer and finds that you do not own any black underwear and refuses to pay your claim as you breached your disclosure requirements and wilfully misled the insurer.

      No, doesn't work. Thus, the insurer can ONLY refuse a claim based on a material breach in disclosure requirements if it is provable or reasonable to assume it altered the risk profile of the policy.
      Underwear worn does not, license suspension definitely does (for driving offences), license suspension for a single unpaid fine is contestable.

      Arguments for the insurer (it does increase risk, it is unreasonable to expect the insurer to refine down to this added detail (suspension reason) in determining claims, claimant wilfully intended to mislead), arguments for the claimant (parking suspension for a single fine does not materially increase risk, it would be reasonable for the insurer to take this into account & dig into these extra details, he was not wilfully trying to deceive and that his failure to disclose did not meaningfully alter the risk profile).

      Magistrate decides, not the contract clause. The contract clause adds weight to the insurer position, it does not decide the case on its own. Past judgements (case law) would be highly relevant, no doubt good lawyers could play off numerous past judgements to support their cases.

      • Oh god, it's you again.

        On the contrary you do not understand contract law.

        On the one hand, you're kind of right on this point. On the other hand, it's irrelevant because insurance policies don't actually follow standard contracts law for the most part, so even though the above commenter may not be 100% right as it comes to contracts in general, in respect of insurance policies, they're basically spot on.

        And just FYI:

        E.g. lets take an extreme case to prove the point.

        You're basically committing a 'reductio ad absurdum" fallacy, just intentionally. Why?

  • +4

    I had a suspension on my learner's licensed for not paying a fine.
    The fine was for not having my student card on me on the train when I bought a consession ticket. Not driving related at all but still got suspension

    • I had a suspension on my learner's licensed for not paying a fine.

      Customers have plenty of time to pay a fine. Why didn’t you pay it before your licence were suspended?

      • +2

        Never got the fine in the mail. Only realised I had a fine when I received the RTA letter saying my licensed was suspended for an unpaid fine

    • +1

      How can your licence be suspended if you took the train on the wrong fare? What if you don’t have a licence?

  • How long was it unpaid and why?

    • http://www.lawaccess.nsw.gov.au/Pages/representing/lawassist...

      21 days from the day you receive it, if it is served on you in person
      28 days from the date of the overdue fine, if it is served on you by post.

    • +1

      I suppose "his friend" forgot about the fine, including the dozens of letter, until one showed up saying "your license is suspended now". And then of course, they also conveniently forgot about the whole episode and wilfully lied to the insurer. :-)

      • If only ignorance was still an excuse

        • It’s possible that op’s friend received cheaper premium by not disclosing the suspension.

        • @whooah1979:

          A budget insurer like 'Progressive' would never have taken on the friend in the first place had they known of the suspension.

        • Indeed, and I also find it a bit strange that everyone seeking help here for an "at fault" claim is always posting on behalf of "their friend". They're all good drivers, ya know? It's the friend who has a problem.

        • @whooah1979: It also doesn't matter whether or not the premium on that particular policy would be cheaper. The insurer might calculate their premiums for the entire age group based on the percentage of suspensions or related factors. They may also have risk limits of suspensions to monitor their policy base. They're entitled to know but OP's friend just wants to have his cake and eat it.

  • +1

    Before anyone gonna bash on OP's friend about the licence suspension due to a parking fine, I got a close call as well. I was short on cash when I got the fine so I called up to make payment plan, fast forward a few months later I forgot about it as it was taken out of my bank account on fortnight and changed bank account with new job. Fund in the old account dried up, SDRO letter gone amiss until the licence suspension warning came in the mail. If I was out on a holiday then the window of paying my fine is only 3 weeks. All this happened in NSW and it can happen again.

    • +1

      My father had a good example. He was pulled over and fined for speeding (10kms over), and then whilst getting that ticket fined for driving unlicensed (suspended from unpaid fines).

      Turns out his suspension was invalid because he had paid the previous fine on time (and had the bank receipts to prove it), but the licensing authority had incorrectly recorded the payment and then suspended his license in the mistaken belief the fine had not been paid.

      As my dad lives on a rural property without mail service (having to drive X km's to get his mail from a local deli/post office) he missed the notification about his license suspension.

      In the end, after about 6 months of trying, the suspension and unlicensed driving fine were overturned. It wasn't an easy battle for him though and involved lots of travel & argument.

      Imagine if he had an insurance claim denied for that reason in the meantime!
      Mistakes do happen, suspensions on your record do not always fit the profile of increased risk for the insurer (as in my dads case).
      An insurer can only refuse to payout if the risk profile of the claimant was meaningfully altered by a failure to disclose. It is arguable both ways whether a parking fine (or failure to pay property rates, or a public transport fine, or an incorrect suspension like my dads) would alter the risk profile sufficiently to allow a claim to be denied.

  • +3

    I am surprised no one mentioned it yet, but assuming your friends have been officially declined by the insurer then he should seek advice from FOS.

    FOS is designed for consumers in mind and they will bat for you if you have a good case, not saying this will solve your problem, but it's worth a try.

    Being declined by the insurer is a really bad thing and going forward he can forget about getting insurance as most have a question asking have you ever been denied a claim by an insurer.

    • -2

      “have you ever been denied a claim by an insurer”
      He can just answer NO to that. Not so difficult mate.

      • you forgot your sarcasm tag dude

  • +1

    I remember one of my friends got a suspended because unpaid fine, he resolved the matter with RTA and got the Suspension removed from his history after he paid the find in full. But this was after couples of weeks of the suspension.

    Maybe he should try to get it removed by visiting NSW service.

    • Lets hope its that easy and there ain't no retroactive bullshit that could come into play. If it isn't then it may make the fight to get the insurance payout cost more than what you would get from the insurance company.

  • Question -
    Lets say PD was the insurer since 2013, always renewed and the suspension was in 2014.

    Can PD refuse to payout, if the suspension wasn't declared and PD wasn't voluntarily informed about 2014's suspension ?

  • +42

    I was an insurance broker for more than 20 years and have some experience with problematic claims.
    First of all I would forget the lawyer because it will be a picnic for them and secondly your friend will be substantially out of pocket.
    Forget what the insurance policy says, look at the insurance contracts Act.

    I am a bit rusty but here is how it generally works. An insurer cannot lawfully decline a claim due to non disclosure. They can only effectively reduce the compensation to the extent that they were disadvantaged. In the case of serious non disclosure they can reduce the compensation to nil and I do not think that is the case in this instance.
    Here is the relevant Progressive Disclosure
    "Before you complete the purchase of your policy, and before each renewal, you have a duty of disclosure under the Insurance Contracts Act 1984. If we ask you questions that are relevant to our decision to insure you and on what terms, you must tell us anything that you know and that a reasonable person in the circumstances would include in answering the questions. You have this duty until we agree to insure you (for the initial purchase) or to renew the policy. Also, before a renewal, we may give you a copy of anything you have previously told us and ask you to tell us if it has changed. If we do this, you must tell us about any change or tell us that there is no change. If you do not tell us about a change to something you have previously told us, you will be taken to have told us that there is no change. You have this duty until we agree to renew the policy. If you do not tell us anything you are required to tell us, we may cancel your policy or reduce the amount we will pay you if you make a claim, or both. If your failure to tell us is fraudulent, we may refuse to pay a claim and treat the policy as if it never existed."

    Two issues Progressive will need to deal with are;
    1) Would a reasonable person think cancellation due to parking fines relevant. It does not matter what anyone here thinks, this is Progressive's problem,
    2) If the disclosure about parking fines had been made and it was referred to a senior underwriter would they have still accepted the risk. Another hurdle for Progressive to overcome
    Another issue is that the insurers usually asked applicants to disclose past driving offences (other than parking fines). Ie Most people think parking fines are not important to most insurers and the decision to accept the risk

    To resolve this your friend should write to the complaints officer at Progressive asking for a review, carefully pointing out the facts and respectfully noting that if they cannot come to a satisfactory resolution, your friend will be referring to the Financial Services Ombudsman. A simple explanation as to why the disclosure was overlooked should be included ( elapsed time, most people don't think parking fines are relevant et al). If they come back with a sensible offer (small incraese in excess) tell your friend to accept it.

    It the complaint is not resolved lodge a complaint with the Financial Services Ombudsman. I am not sure of the charges now but if a complaint goes to FSO adjudication the insurance company is charged a fee and it is $1,000's, no charge for the consumer. The FSO will write to Progressive recommending they try harder to resolve the complaint. If the complaint is not resolved. They will ask each party to lodge a submission and they will make an adjudication. The adjudicators are typical a panel of 3 (consumer advocate, insurance industry rep and a lawyer). I understand most of the decisions are biased towards community standards and not black letter. The decisions up to $250,000 are binding on the insurer but not the consumer. Very few disputed claims get to this level law.

    • Great informative post Taylor. Thanks for that info.

    • This is the way to go, Taylor is right. But could go either way. Law of disclosure is strict, but it maybe that they would have covered him despite the old suspension with a loading. FSO is the way to push for now. Have not read PDS and this is not personal advice!

      Process is will take time. Best of luck.

    • +1

      This is a very good point: ""Would a reasonable person think cancellation due to parking fines relevant. It does not matter what anyone here thinks, this is Progressive's problem".

      • +1

        The problem is, though, the question is pretty cut and dry: Has your license been suspended? (or words to that effect)

        It's like being caught speeding. Simple fact is, you were speeding. You may well have a very good reason for speeding, and once in court, the judge may very well agree with you that your speeding was justified. If you're ever asked "Have you been caught speeding?" then you must answer yes.

        On non-budget insurers, they may then ask for more details, and proceed to insure you.

        A reasonable person would answer "Yes" to the question if they have had a suspension.

    • +2

      I think this answer is on the money. The FOS is an excellent service and they are even handed.
      There is a general rule that genuine claims should be paid. Insurance companies that try to use means to avoid payment are frowned upon. Having said that non disclosure is a critical clause that must be answered honestly.
      As the cancellation happened some years ago and was not the result of " bad driving " forgetting might be deemed reasonable. Progressive have to show that they would not have entered into the contract, but more particularly that the non disclosure represented additional risk. If there is a correlation between license cancellation for unpaid fines assuming the same or similar driving records as your friend they would succeed. It's doubtful those stats are available and less likely that the correlation exists.
      The cancellation clause is there as there is considerably more risk for an insurer when insuring these drivers.
      Try Progressive first then FOS. Good luck.

    • -1

      Would a reasonable person think cancellation due to parking fines relevant. It does not matter what anyone here thinks, this is Progressive's problem

      The question wasn't about parking fines, but about licence suspensions. I don't think anyone would think that that question isn't reasonable or relevant.

  • +1

    The opinions offered are all partially correct.

    • Technically your friend is at fault for failing to disclose.

    • However, if the non-disclosure was not intentional, it may be considered from the perspective of: "If the insurer knew of the suspension, would they have still insured the driver". Normally the insurer is happy to insure, but they might charge a higher premium. In this case, if your original premium was $500, and the premium with the known suspension is $700, then you would pay for the difference in the insurance premiums over the term of your insurance, and still be eligible for an insurance claim.

    • It is easiest to speak with the insurer. Before doing so, if you'd like supporting evidence, best to try an online application and disclose and see whether you could obtain insurance, which means that they would be willing to cover you with the known suspension.

    Hope that helps. Good luck.

    • I like the idea of a setup. One you can get in writing.

  • If the insurance company state they would not have insured the driver can he reclaim his premiums?

  • +2

    They are refusing the claim reliant on S21 & 28 of the Insurance Contracts act - non-disclosure. To do this, they need to be able to prove:
    - That your friend was told that he needed to disclosure the suspension
    - That if he had disclosed, it, they would not have offered cover

    I'd dispute it via their internal disputes resolution department. Half the time some nuffy with no idea makes this decision, and it is incorrect. Dispute it through the manager of whoever made the decision. They have something like 15 days to respond to your dispute. If they maintain the decision, dispute it further through their dispute resolution department. If they maintain it again, you can take it to the Financial Ombudsman Service (FOS).

    If it is disputed at FOS, they'll need to show that this is their process, examples of policies they have refused before for this reason, the responses your mate provided to their duty of disclosure questions (if verbal;, they'll need to provide a copy of the conversation).

    Don't bother with a lawyer - FOS is much better.

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