Undisclosed debt agreement results in rejected insurance claim

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The insured claimed for damage to her car following an accident in March last year. After buying her policy in i2018, she renewed it in i 2020. The client had entered a debt agreement on January 31, 2019 but failed to disclose it to her insurer at renewal.

The insurance company rejected her claim, saying it learned only recently she had a debt agreement and would not have re-issued the policy if it had known.

The insured alleged that she was not asked whether or not she had entered a debt agreement when renewing her policy but the Australian Financial Complaints Authority (AFCA) determined that the insurer had reasonable grounds to deny the claim due to the non-disclosure of information by the complainant. 

The AFCA found evidence from which it appeared that the insurer informed the complainant of her duty of disclosure on policy renewal in a clear manner.

According to AFCA , “Section 21 of the [Insurance Contracts Act] provides for the insured’s duty to disclose every matter known to the insured that the insured knows to be a matter relevant to the insurer’s decision to accept the risk”.

The complainant said the insurer did not ask her specific questions about her financial position and was unaware of her need to inform the insurer that she had a debt agreement.

“I acknowledge that the complainant says that the insurer should have specifically asked her about her financial position during phone calls, however, the insurer is not required to do this.” AFCA said

The certificate of insurance required that the insured confirm that she was not currently bankrupt or subject to a debt agreement. The AFCA states that the complainant “provided no information to indicate a change in the matter”.

The insurer said that it was prejudiced by the fact that she withheld information about her debt agreement, and would not have renewed her policy had she informed them of this.

The insurer had to refund the complainant's premium for the policy period that commenced from her renewal if it had not done so.

Published:Wednesday, 25th May 2022
Author:

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

New Cyber Insurance Solution for Australian SMEs: Cowbell and Zurich's Prime One

03 May 2026: Paige Estritori

In a significant development for Australia's small and medium-sized enterprises (SMEs), Cowbell, in partnership with Zurich Australian Insurance, has launched 'Prime One', a standalone cyber insurance program designed specifically for businesses with annual turnovers up to AUD $100 million. This initiative addresses the growing need for comprehensive cyber protection in an increasingly digital landscape. - read more

Strengthening Small Business Resilience: ICA's Call for Comprehensive Insurance Reforms

03 May 2026: Paige Estritori

The Insurance Council of Australia (ICA) has recently submitted four comprehensive proposals to the Parliamentary Joint Committee's inquiry into small business insurance, emphasizing the urgent need for reforms in areas such as insurance taxation, climate resilience, risk education, workplace mental health, and cyber resilience. These initiatives aim to bolster the resilience of Australia's 2.5 million small businesses, which collectively employ nearly half of the private sector workforce. - read more

Chubb Enhances Professional Indemnity Insurance Access for Australian Businesses

03 May 2026: Paige Estritori

Chubb Insurance Australia Ltd. has expanded its suite of offerings by introducing professional indemnity products on the client trading platform of Steadfast Group Ltd., Australia's largest general insurance broker network. This strategic move aims to provide Australian businesses with enhanced access to comprehensive professional indemnity coverage. - read more

Rising Insurance Premiums and Declining Profits in Australia

25 Apr 2026: Paige Estritori

Recent findings from KPMG's annual review of the general insurance industry reveal a concerning trend for Australian businesses: insurance premiums are on the rise, while industry profits are experiencing a downturn. This development is largely attributed to the escalating costs associated with natural disasters. - read more

Essential Business Insurance Trends for Australian SMEs in 2026

25 Apr 2026: Paige Estritori

As Australian small and medium-sized enterprises (SMEs) approach 2026, the business insurance landscape is undergoing significant transformations. Understanding these emerging trends is vital for SMEs to ensure adequate protection and compliance. Here are five key insurance trends shaping the SME sector: - read more

Click for more Insurance News

Car Finance- Quick & Easy

If you are in the market for a new or used car, then we're in the market to help you arrange the money. Our car loan & leasing finance service is backed by a national panel of car loan specialists who will establish your eligibility, find lender/s offering the best deals for your situation - and help you through the approval and settlement process. No charge to you - and no obligation to proceed with any recommendations offered.

... start your car loan here ...