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issue 72

September/October 2008

motor insurance complaints involving claims for theft

The following selection of case studies illustrates some of the complaints we have dealt with recently involving the theft of a motor vehicle.

issue 72 index of case studies

  • 72/1 - motor insurer declines claim for theft of car - on grounds that car could not have been taken without the use of the programmed key
  • 72/02 - motor insurance - theft claim turned down because policyholder failed to disclose relevant information
  • 72/03 - motor insurer declines claim for theft of car - saying car could not have been driven away without use of its programmed key
  • 72/04 - several months after repair of accidental damage to his car, policyholder notifies insurer of damage apparently overlooked during the repair

72/01
motor insurer declines claim for theft of car - on grounds that car could not have been taken without the use of the programmed key

Mrs D's teenage son arrived home one afternoon and said her car was missing from the spot where she always left it, just outside her house. Not long afterwards the car was discovered just a short distance away. It was badly damaged and appeared to have been driven off the road and to have caught fire.

The insurer turned down Mrs D's claim. It said its loss adjusters had noted that the car could only have been operated by someone using an "intelligent" (programmed) key. The key had not been left in the car and Mrs D had not reported that either of her two keys had been lost or stolen. When asked to produce the keys, she had at first been able to find only one of them, although she later found the other key.

Mrs D challenged the insurer's insistence that the car could only have been taken by someone who had the programmed key. In response, the insurer cited a report from motor vehicle security experts, which it said supported its view.

The insurer also suggested that the only other way in which the car could have been moved was by means of a transporter or tow-truck. Either of these would have caused the car's alarm to sound, alerting Mrs D to the theft. But in any case, as far as the insurer was concerned, the fact that the car had been driven off the road immediately before the fire indicated that a key must have been used.

complaint not upheld
Mrs D then referred her complaint to us. She said she had been extremely distressed by the firm's stance and by its implication that she - or someone in her family - had taken the car and caused the accident. She produced evidence from the original dealer to support her argument that the car's security could be by-passed, and that the car could be operated without the use of the programmed key.

It was clear that the incident had caused Mrs D much distress and we did not doubt her honesty. However, we did not uphold the complaint. We noted that the technical evidence Mrs D produced, supplied by the original dealer, was of a very general nature. It did not make any specific reference to the make and model of Mrs D's car. By contrast, the technical evidence produced by the insurer referred very specifically to the exact make and model that Mrs D had owned.

We also took account of the particular circumstances of the case and the possible alternative explanations for what had happened. We concluded, on a balance of probabilities, that the firm had sufficient reasons to refuse to pay the claim.

72/02
motor insurance - theft claim turned down because policyholder failed to disclose relevant information

Mr G referred his complaint to us after his claim for the theft of his car was turned down. The insurer said Mr G failed to disclose relevant information when he applied for his policy. He had not mentioned a claim he made three years earlier for car theft. He had also failed to disclose an earlier accident claim, made the year before he took out this particular policy.

The insurer said that if he had provided all relevant information, the premium would have been approximately £1,000 higher than the amount he had been charged.

complaint upheld in part
Mr G did not dispute that he had failed to provide the information in question. He said the earlier theft had simply slipped his mind when he was filling in the application form, and he had "not particularly concentrated on the issue of past claims" when he was seeking a quote.

He argued that his claim should be paid in full, as he did not consider he had done anything wrong. He said he would have been happy to pay the additional £1,000 if he had been asked to do so, and he suggested the firm should deduct this sum from his current claim.

After seeking clarification from both parties, we concluded that Mr G's failure to disclose relevant information was unlikely to have been an "accidental" or "casual" oversight, which might in some circumstances have meant that the insurer should still meet the claim.

Equally, we could find no evidence to suggest that Mr G had been dishonest in failing to provide the required information. But he did appear to have been very careless and we said the insurer was entitled to turn down the claim, even though there was no reason to doubt the car had been stolen.

However, we did not agree that the insurer had acted correctly when, after deciding not to meet the claim, it retained Mr G's insurance premium. We said it should return this sum to him, together with interest.

72/03
motor insurer declines claim for theft of car - saying car could not have been driven away without use of its programmed key

As he left the house on his way to work one morning, Mr F discovered that his car was missing from the spot where he always parked it overnight. He immediately reported the theft to his insurer and to the police.

The insurer subsequently refused to pay his claim. It said the car could only have been driven away by someone using one of the car's programmed keys. And it provided expert evidence illustrating just how difficult it was to start the ignition on that particular make and model of car without one of the original keys.

Mr F had only been able to produce one of his two keys when it had asked him to hand them over. In the insurer's view, this cast serious doubts over his story.

complaint upheld
Mr F referred the dispute to us. He said he had not had a working second key for some time. He had intended to buy a new one. However, the age of his car meant it was no longer serviced by the main dealer and he had not got round to finding an alternative supplier. As he was the only driver, he had not felt there was any urgency about the matter.

Mr F stressed that he had reported the loss of his car very promptly. He had also provided evidence that he had been at home the evening before he had found the car missing.

After reviewing all the evidence, we found nothing to indicate that it would have been impossible to start the car without one of the programmed keys, even though the firm's technical evidence indicated that this would clearly have been difficult.

More importantly, however, we noted that Mr F had very recently had some remedial work done on the car at a local garage. He had previously had the car serviced at several other garages in the area. All of these garages had access to the key - which could be replicated with the appropriate technology.

We noted that Mr F provided strong evidence that he had not left his house at all on the evening immediately before he had reported the car missing. And the insurer accepted that the police report did not indicate anything untoward. On the balance of probabilities, we decided the evidence pointed towards the car having been stolen. We said the insurer should pay Mr F's claim, reimbursing him for the value of the car.

72/04
several months after repair of accidental damage to his car, policyholder notifies insurer of damage apparently overlooked during the repair

After Mr B's car was damaged in a road traffic accident, his insurer accepted his claim under his comprehensive motor insurance policy. One of the insurer's approved repairers carried out the necessary remedial work and Mr B signed off the work as having been satisfactorily completed.

Four months later, Mr B was involved in another road traffic accident. He later said that as there was only minor damage to his car, he had not contacted his insurer but had simply gone ahead and arranged the repairs.

Mr B said that, while repairing the car, the garage had spotted some damage to the boot that did not seem to have been caused by the most recent accident. So he told the insurer the original repairers must have failed to complete the job properly.

The insurer arranged for a different garage to inspect the reported damage. It also asked the engineer who had inspected the car after the first accident to review his report and the photographs taken at the time.

As a result of its findings, the insurer refused Mr B's request that it should pay for the repair of the boot as part of the original claim. It said there was nothing to connect this damage to the original accident. Mr B then brought his complaint to us.

complaint not upheld
After looking at all the evidence, we found nothing to support Mr B's view that his car's boot had been damaged in the original accident. And we did not agree that there had been any "negligent act or omission" on the part of the repairers who had carried out the remedial work after the first accident.

The insurer had not been required to disprove Mr B's allegations. However, by instructing independent experts and seeking clarification from the original inspecting engineer, it had gone to some lengths to try to establish whether it was liable for the damaged boot.

Although it had declined to consider the damaged boot as an outstanding issue from the original claim, the insurer had offered to deal with it as a new claim, subject to a new policy excess. We said we thought this was a fair and reasonable offer and we did not uphold the complaint.

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.