A domestic violence victim (the Complainant) lodged a complaint with the Australian Financial Complaints Authority (AFCA) against her former insurer, RAA Insurance Limited (RAA), for removing her from a comprehensive motor policy jointly held with her former partner (Mr A).

In July 2020, Mr A had contacted RAA without the knowledge or consent of the Complainant and sought to cancel the policy. Mr A then took out a new policy for the vehicle under his own name.

The Complainant submitted to AFCA that:

  1. She had a financial interest in the vehicle;
  2. RAA changed the policy without her consent;
  3. RAA failed to treat her as a vulnerable person despite having knowledge of her separation from Mr A and that she had been in an abusive relationship.

RAA’s insurance policy provided the following:

If more than one person is named as the insured on the Certificate of Insurance, each person is a joint policyholder and is able to make any changes to the policy other than remove another insured

RAA to issue an apology and pay compensation for non-financial loss

RAA did not dispute that its carriage of the matter had a significant impact on the Complainant and its failure to comply with its own policies had caused the Complainant a great degree  of “physical inconvenience and stress”. On this basis AFCA submitted that the Complainant was ultimately entitled to compensation for non-financial loss. In these circumstances, AFCA awarded the Complainant the maximum sum of $5,400.00 as allowed under the AFCA Rules where an insured suffers any inconvenience, delays or loss of enjoyment of life.

The Complainant also sought that the insurer pay her the sum of $25,000.00 being half the value of the insured vehicle.

Although AFCA accepted that the Complainant was a vulnerable person, to the extent that the dispute related to the financial interest of Mr A and the complainant in property jointly held by them, this was a civil dispute and should be handled by the Courts. This was not something that could be dealt with by way of insurance policies.

This decision is an important reminder for insurer’s to act fairly and openly in circumstances where a co-insured’s interest are at risk, particularly where they have knowledge of a relationship breakdown.