2 days ago
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Finance Guide
Australian car owners have reported being "denied insurance coverage" by multiple car insurers after having their vehicles stolen by thieves, in a surprisingly common industry practice some have labelled "victim blaming".
"We were victims of an aggravated burglary where five masked people broke into our house while we were sleeping and our car was stolen," a message posted to Felgate's Instagram page reads.
"ING initially supported us and handled our claim well, which we appreciated. Now, after buying a new car and wanting to stay loyal, we're told by ING that they won't insure us for at least a year. We are faultless victims of crime. How is this fair? ... It feels discriminatory and victim blaming."
When Drive approached Auto & General – the company that underwrites policies for ING Insurance – for comment on the matter, a spokesperson supplied the following response:
“In regards to the theft related car insurance claim noted in the Instagram post, Auto & General paid out as expected on that claim and as noted by the customer, we supported and handled the claim well. We then processed that the renewal, considering all factors and decided not to offer further cover.”
Felgate's social media post has received almost 100 comments from people who have experienced similar treatment from their insurers.
"This is my exact story! I was the victim of an aggravated home invasion (was held at knifepoint and seven months pregnant at the time!!) and even though I had the police report etc, the only insurance company that would insure me was AAMI (who handled my initial claim!). Every other company said they wouldn’t insure me if I had filed a stolen car claim in the last three years. I called so many and every company just said ‘it’s our policy’. So awful!," one commenter wrote.
"My car was stolen during a home robbery and Budget Direct have cancelled my insurance and I’ve now had to go through a broker and pay wayyyyy more $$$$ for insurance because I can now not go through an insurance company for five years," another commenter claimed.
Another said: "I was refused insurance by several insurers including my existing after my car was stolen from my home. I was appalled".
Other social media users argued the practice was yet another example of unfair conduct by insurers.
"Even discounts for people who don’t claim doesn’t feel right! Getting punished for using a service you are paying for is [queasy emoji]," one social media user added.
Can insurers cancel your policy if you're a victim of car theft?
Unfortunately, while it may seem unfair, this practice is permissible under the insurance industry's code of conduct.
As it turns out, insurers are able to practise commercial discretion as to whether they do or don't insure and on what terms, which are often governed by their underwriting practices.
Chris Liamos, Senior Ombudsman for Insurance at the Australian Financial Complaints Authority (AFCA), told Drive, "AFCA has limited jurisdiction to deal with complaints where an insurer refuses to provide insurance coverage".
"Basically, we can only deal with these types of complaints if: the complaint is that the decision was made indiscriminately, maliciously or on the basis of incorrect information, the complaint is that the complainant was misinformed about the insurance cover, or it is a medical indemnity product."
A spokesperson for the Insurance Council of Australia (ICA) told Drive this practice is not unusual, with insurers able to "decline to renew an insurance policy" based on a range of factors.
According to the ICA, these factors include: "Claims history, for example, where a policyholder may have made multiple claims within a certain timeframe [and] new information, where the insurer may have become aware of new information that changes the policyholder’s risk profile".
The spokesperson added: "Insurance is a competitive market and just because one insurer declines to offer insurance doesn’t mean others won’t offer coverage. The ICA always recommends customers shop around to find the best policy for them for the right price".
What to do if your insurance policy is cancelled or denied
According to the AFCA, consumers have the right to ask their insurer to explain the basis for refusing cover.
"If they are dissatisfied with the response, they can ask the insurer to review this through their complaint (also known as the internal dispute resolution) process," the Ombudsman explained.
"If they remain dissatisfied, they could lodge a complaint with the AFCA if they believe it falls within one of the exceptions above.
"If they are having trouble finding insurance themselves, they could consider speaking to a broker to assist."
Like a mortgage broker, an insurance broker is an independent and licensed professional who can advise consumers on the appropriate policy for them.
According to Allianz: "Brokers generally receive a commission from the insurer on each policy they arrange on your behalf and may also charge a fee to you directly".
Susannah Guthrie has been a journalist for over a decade, covering everything from world news to fashion, entertainment, health and now cars. Having previously worked across titles like The New Daily, Elle, Harper's Bazaar, People Magazine and Cosmopolitan, Susannah now relishes testing family cars with the help of her husband and three-year-old son.
