Car Insurance Company Denying Claim Due to Undisclosed Licence Suspension

Lsalmon90 on 27/07/2018 - 18:23
Last edited 28/07/2018 - 17:49 by 1 other user

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?

Automotive

Comments

  • Geryatric on 29/07/2018 - 22:43
    +5

    AAMI is similar to the below… pretty sure it’s governed by industry regulations…

    NRMA

    In the past 2 years, has any owner or driver had their licence cancelled or suspended due to any driving offences?

    Please ensure you are clear about the date of the licence cancellation or suspension

    Answer Yes if

    • it was due to a driving offence such as speeding or negligent driving, and
    • all or part of the suspension period was within the last 2 years

    **Answer No if

    • it was for parking infringements, or**
    • the licence cancellation or suspension was more than 2 years ago
  • Eeples on 30/07/2018 - 06:49
    +2

    You say your friend forgot about the suspension in 2014 which is 4 years ago…. so within the 5 years.

    But, he has renewed the policy on more than one occasion….

    This implies when he inially took the policy his suspension was only 1 or 2 or 3 years in the past.

    This imo makes it unlikely he forgot.

  • Daniel Plainview on 30/07/2018 - 10:19
    -2

    Writing for your friend eh? Prolly best if they wanted advise to write for themself but anyway….

    As others have said, it's black and white and your pal has NO CHANCE - he provided false info in a critical area on the policy - it doesn't matter what the suspension is for and I'd be rather surprised if a licence was suspended solely for an unpaid parking fine - I'd imagine there's other infringements that contributed to that - but regardless his licence was suspended and he said it wasn't - which would have gotten him a lower premium &/or able to be covered.

    He can get legal advise etc but it's going to be throwing good money after bad as the insurance co has multiple lawyers on staff and it effectively costs them zero to handle his lawyers contacts - whereas your pal will be paying hundreds of dollars in 5 min increments.

    Sorry but he has to put it down to paying more attention when filling out important documents - the question is there for good reason and he provided a false answer to it. Is a negative for him but I'd say spending more $$$ is just going to be a sunk cost.

    • [Deactivated] on 30/07/2018 - 15:15

      Perhaps you should read the comment above from someone in (or who was in) the industry.

  • knk on 30/07/2018 - 10:48

    You can have your license suspended for not paying a parking fine?

    • bobbified on 30/07/2018 - 11:52

      It's been that case for years (for NSW, at least). Not even just driving-related fines - It's any fine that goes to the State Debt Recovery Office (SDRO). For example, if you get a fine for travelling on the train without a valid ticket or even a littering fine. If you don't pay, they will suspend your licence.

      • HighAndDry on 30/07/2018 - 15:15
        +1

        Usually they send entire reams of reminder notices before it gets to a suspension. And short of debtor's prisons (or taking people to court and seizing their assets), it's a fairly effective and not-wholly-unfair way to enforce these fines. Once you take into account all the avenues of appeal and that you can get the suspension reversed (as if it had never happened) if you have extenuating circumstances, it's actually pretty fair.

        • Cartman2530 on 30/07/2018 - 20:56

          Agree its not one letter, its heaps, they give you a fair chance to respond. Unless your mail is going to an old address (which says on the back of your licence must be changed at the RTA within 14 days) ignoring it will not make them forget.

      • whooah1979 on 30/07/2018 - 22:17

        The way nsw collect fines is cost effective for their taxpayers.

  • geoffs87 on 30/07/2018 - 11:01

    Curious to know, I lost all my points a couple years ago, and i took the double or nothing route (they gave you 2 points for 12 months, and if you lose your license for twice the initial term).

    I won't go into details, but it was a pretty unfortunate circumstance on a double demerit weekend that saw me lose them all in one roadside stop. I take full responsibility, but certainly sucky!

    Anyway, I took insurance with Bingle, because their questions was: "In the last 3 years how many car related claims, driver licence suspensions, cancellations, disqualifications and restrictions has the main driver had?"

    I haven't been able to find anywhere that states my double or nothing falls into any of those categories. Does anyone who knows, have any idea about this at all?

    I ticked No, because my license hasnt been suspended, cancelled, disqualified or restricted… but yeah now i'm wondering if something happened, would i get canned also?

    Thanks!

    • geoffs87 on 30/07/2018 - 11:04

      according to nswcourts.com.au:

      If you have an unrestricted driving licence you can request to serve a 12-month good behaviour period in lieu of suspension.
      You will need to apply to RMS before your suspension starts.
      If you are approved, your licence won’t be suspended, but you will need to avoid accumulating more than two demerit points for the 12-month period.
      If you go over the two-point threshold, your licence will be suspended for double the original period of time.

      https://nswcourts.com.au/articles/demerit-point-suspension-i…

      Hopefully, that means i havent been suspended, and therefore means i'm in the clear :)

      • HighAndDry on 30/07/2018 - 15:13
        +1

        Yup, your interpretation is correct. They can't reverse a suspension (which is why you need to apply before your suspension is official), but if you do - it's not a suspension at all.

        • geoffs87 on 31/07/2018 - 15:41
          +1

          Yeah cheers.

          I ended up calling Service NSW, and they confirmed i was issued with a notice of suspension, but given i took the good behaviour, my license was never suspended/disqualified/restricted etc.

          So all good! Thanks :)

  • nith265 on 30/07/2018 - 12:29

    Consider lodging a dispute with Financial Ombudsman

    It’s free for you and will cost the insurers a minimum of $5,000 to contest. At very least the threat of it can be enough to bring them to the negotiating table.

    If there was a ‘reversal’ of the licence cancellation due to some communication breakdown etc I’d say he has an excellent chance. If as it stands his police record says it was cancelled, he forgot and there are no mitigating circumstances he’s got little hope.

    Read this case it’s kind of similar with regards to non-disclosure of criminal conviction – unfortunately for you the applicant loses and his insurance is claim denied.
    https://forms.fos.org.au/DapWeb/CaseFiles/FOSSIC/200082.pdf
    Note how he might have had a chance had he not done the same nondisclosure of his for his house and contents instead of just car

  • tryagain on 30/07/2018 - 12:47

    I didn't read every post in detail but I think he or someone else should get a quote with his full disclosed history, If progressive offer insurance you have a gotcha, he will have to pay the difference between the premiums but it would be very hard for them to claim they would never have insured him if they have offered insurance in an identical situation.

  • Donaldhump on 30/07/2018 - 13:28

    i think its oppurtunistic b/s of the insurance company to get out of something. if the suspension would have increased the amount of the policy then it would be fair to ask for this difference.

    why not record a phone call of someone else getting car insurance after disclosing the suspension, and see if it goes through, thus proving the suspension would not have prevented them from having insurance.

    • HighAndDry on 30/07/2018 - 15:10

      if the suspension would have increased the amount of the policy then it would be fair to ask for this difference.

      Not just that. Progressive wouldn't have agreed to insure the friend in the first place - they're budget insurers, they don't insure people who've had licence cancellations or suspensions at all.

  • whoopdeedoo on 30/07/2018 - 13:47

    speaking of insurance, do I need to inform my insurer that I just got a speeding fine. How about when its time to renew, do I need to inform them of new infringements.
    If so, how many of us disclose this?

    • HighAndDry on 30/07/2018 - 15:09

      Read your PDS (is the standard advice) but in my experience you only need to update information at renewal (you only need to tell your insurance about actual accidents as they happen) - on renewal, the usual wording is "This is the information you provided us previously, please let us know if it is no longer accurate", and if you've said "I haven't had a speeding ticket in the past X years" then you would have to update that portion.

      I don't notify my insurer about speeding tickets, I update them on renewal. You obviously also should notify your insurer if your licence is suspended or cancelled, but if that happened to me, I'd be doing it so I can cancel my policy and get a part of the premiums back more than any other reason.

  • Dont Care on 31/07/2018 - 13:07

    I don't get how anyone can just forget misdemeanours. How do you forget a speeding or parking ticket unless you have so many you can't keep track of them all.

  • Iam12 on 31/07/2018 - 13:45

    Not sure if worth the hassle but what about a scenario where the other party admits that they were actually at fault and you go through their insurance to get your car repaired. Meanwhile your friend offers to cover all the expenses from the increased premium until it lasts as well as a bonus for being a good sport. Maybe cheaper than having to pay 20k in repairs.

    Who knows if this is something that can be done or its too late.

    • PissLUR on 31/07/2018 - 15:10
      +3

      fraud.

  • tcme on 01/08/2018 - 00:57
    -1

    Legally they cannot deny the claim. The law states an insurer cannot decline a claim based on something that has nothing to do with it.

    For example, almost all policies will say you need a roadworthy vehicle to be insured. If you had completely bald tyres, and someone rear ended you when you were stationary at a red light, they would have to pay you because at the time it made no difference as to whether you were roadworthy or not.

    In this instance, they obviously ask about your license suspension history to ascertain your risk as a driver. An unpaid parking ticket has absolutely nothing to do with your risk.

    I suspect, as for-profit companies, that an insurer may decline a claim hoping people don't fight back. Even if they "unlawfully" decline 5 events similar to your friend's, that's still $100,000 a year for their profits.

  • payless69 on 01/08/2018 - 12:02
    +1

    Get your "friend" to open his own OB account and give us the real and full story. We are all sick of grape vine chatter!

    • Baysew on 01/08/2018 - 15:34

      Yes, due to the Privacy Act considerations, we can't discuss with a third party.

  • askme69 on 05/08/2018 - 11:52

    The suspension was due to money, not accumilation of demerits, completly different things.

    Lawyer up or speak with the Ombudsman.

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