Insurance Claims Services Blog

A new exclusion has appeared on motor policies issued by NRMA and RACV. Quietly tucked away on page 31 of an 88 NRMA policy booklet and page 69 of an 80 page RACV wording is a clause reading:

“We may refuse a claim, cancel this policy, or do both if at the time of the incident your vehicle was being driven or was attached to a vehicle being driven in a manner which resulted in a deliberate exposure to any wilful or reckless act or exceptional danger”.

This clause is outside the motor policy wording prescribed by law. The law requires an insurance company to notify a prospective customer in writing that their policy contains an unusual provision – but how many people have been so warned?

Moreover the insurance company itself has the power to decide whether or not there was deliberate exposure or reckless act. Most motor accidents are the result of thoughtless, and sometimes stupid and/or reckless driving, but now the consumer is faced with an exclusion which specifically narrows the cover.

Have a look at your NRMA or RACV motor policy and ask yourself whether you were in fact warned in writing of this restriction, and if you weren’t ask your insurer why not. There is far too much going on in the insurance industry which is less than frank and open, and it is high time such tactics were brought to the consumer’s attention. The government will take no action, but this site will expose such issues.

Meegan Johnstone, the owner of a small car hire firm, suffered fire damage to three of her eight vehicles. The insurer, a subsidiary of Lumley General Insurance, denied liability accusing her of fraud but would not say why.

She took the case to the Insurance Ombudsman. The insurer wrote to the Insurance Ombudsman asking them not to consider her claim because “their position would be prejudiced”.

The Insurance Ombudsman replied to Meegan Johnstone, saying:

“The Service has jurisdiction to deal with disputes between insurance companies and consumers with respect to personal lines general insurance. Rental car fleet insurance is not one of the insurance products that fall with the scope of the Service’s Terms of Reference”

This reply was totally untrue and was in fact a pack of lies because their Terms of Refernce DID make provision for such a small business – so why and how did such a letter come to be written?

We wrote to the then Ombudsman, Sam Parrino, but he would not reply.

We then wrote to the Panel Chair, Peter Daly, who did reply but refused to address the question.

We have now written to the new Chief Ombudsman, Colin Neave, but he too will not answer the question and instead dodges around the issue. There is no apparent reason for this claim being avoided – which of course helps the insurance company – other than that of deliberate bias to support the insurer.

This article is being copied to Colin Neave at the Financial Ombudsman Service, and we now publicly invite him to provide a genuine explanation. This is documented evidence that MUST be explained – the consumer deserves nothing less. So, Mr Neave, will you now let us have the explanation that is so long overdue?