‘Whole discretion’: insurer has right to pay third-party accident claim – Daily – Insurance News

A company that lodged a complaint against its insurer’s decision to pay a third-party accident claim and charged excessive fees has lost its dispute after a ruling by the Australian Financial Complaints Authority (AFCA).

The company filed a complaint in connection with a collision involving one of its garbage trucks and a third-party vehicle on September 2, 2020.

The complainant did not file a claim for damage to her vehicle but initiated one for legal liability after the third party insurer sought $8,661.28.

The claimant’s insurer, Sura, accepted the claim and chose to settle the matter after reviewing evidence from both parties. It also chose to apply a $2000 excess policy for the claim.

The policyholder disputed the insurer’s decision, saying it failed to properly defend the third-party claim and that the truck driver was not at fault in the collision.

The driver said he was “turning slowly, with caution” with his warning lights on at the time of the collision.

He said the third party “clearly saw his vehicle and the maneuver he was doing,” and “had enough space to slow down and give way to him but chose not to and caused the collision”.

The third party said they slowed down and were “preparing to stop” when they saw the garbage truck backing up, but chose to move forward after the vehicle stopped.

They reported that the complainant “continued to swerve and hit the left side of their vehicle in the rear of his vehicle”.

The insurer said the Mobile Plant and Machinery policy outlined that it retains “full discretion” to “take up and effect the defense or settlement of any claim,” on behalf of the insured.

“We have full discretion in conducting any legal proceedings and in settling any claims. You must cooperate by providing us with any statements, documents or assistance we require,” says the policy’s Product Disclosure Statement (PDS).

The AFCA recognizes that the insurer has a responsibility to ensure that its discretion “shall be exercised fairly and reasonably,” but it states that it is within its rights to adjust the claim as it sees fit.

It said the two parties’ explanation of events, as well as the provided CCTV footage, showed that the “onus was on the complainant to ensure it was safe … and give way to the third-party”.

“The complainant’s CCTV footage shows that the third-party vehicle had established itself in its lane and was traveling on the road before the collision occurred. Therefore, I am satisfied that the third-party had the right of way,” AFCA said.

“The CCTV footage also shows the complainant’s vehicle slowing down or stopping before the collision occurred, which is consistent with the third-party’s version of events.”

The decision also determined that Sura was entitled to apply the excess $2000 as stated in the terms of the policy.

The AFCA defined the PDS, which stated that policyholders “may be required to pay one or more excesses,” after filing a claim. The Policy Schedule stipulates that the excess for garbage trucks will be charged at 1% of the sum insured, or $2000, whichever is greater.

Click here for the ruling.

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