A woman held a car insurance policy with Suncorp insuring a 2013 Kia Optima for the sum of $14,700.00. The woman’s vehicle was involved in a collision and was deemed a total loss for the sum of $14,000.00.
The woman alleged that Suncorp had wrongly paid the sum to her estranged husband who she was divorcing.
The woman took the matter to the Australian Financial Complaints Authority (AFCA) seeking the following relief:
- the total loss sum of her insured vehicle;
- damages for time spent without a vehicle; and
- a refund of all insurance premiums.
In order to grant the relief sought, AFCA would need to be satisfied that the women was solely entitled to the settlement sum of the claim while her husband was not entitled to any funds whatsoever.
The woman submitted that the vehicle was purchased with funds that would have formed part of the divorce settlement.
AFCA held that Suncorp did mishandle the claim to the extent that they paid the settlement sum of the claim to the husband without seeking the consent of the wife. AFCA submitted that Suncorp should have obtained the consent of all insured parties prior to issuing a payment under the policy.
Suncorp submitted that at no point prior to payment was it notified of any breakdown in the relationship. However, the husband had contacted Suncorp three weeks prior to the collision that resulted in a claim being submitted and stated that he was divorcing his wife and the car would be part of a divorce settlement. AFCA considered that this should have put Suncorp on notice of the issues of paying one party without consent of another.
AFCA held that “in the absence of such an agreement or court order, an insurer that disburses a benefit to one jointly-insured party risks depriving another jointly-insured party of their entitlement.”
Despite the misconduct of Suncorp, AFCA held that the fairest approach was for the matter to resolve “as part of the divorce proceedings” and Suncorp did not need to to pay compensation to the wife. AFCA’s ruling stated that “without an agreement between the complainant and (her husband), or a court order, AFCA cannot determine whether one of them is solely entitled to the claim settlement, or whether each of them is entitled to part of the claim settlement”.
The above was also based on the fact that the wife did not provide any evidence that she was solely entitled to claim the settlement payment from Suncorp or that it was the wife alone that had paid for the insurance over the motor vehicle. All information before AFCA showed that her husband also had an interest in the car.