Case Studies



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Ms A purchased a travel insurance for a skiing holiday. While abroad, one boot was damaged. Some days after returning home, Ms A made a claim and presented a receipt for a brand new pair of ski boots she purchased while abroad. The insurance company informed Ms A that they would only pay for the equivalent of one ski boot as the other boot was not damaged. Ms A argued that ski boots are bought in pairs and it would be impossible to buy solely one ski boot to replace the damaged boot.

The relevant clause in the insurance policy stated thus: “we will pay for individual damaged or lost items forming part of a set or pair but not for companion pieces which were not damaged or lost.” The Unit held the view that in an insurance loss settlement involving a pair or set the value of the loss is based on the reasonable and fair proportion that the lost or damaged item bears to the total value of the pair or set. The application of the insurance clause may be reasonable but only in instances where the remaining item does not reduce the value of the pair or set to zero – such as in this case where there was no value in the remaining shoe.

The insurance company concerned appreciated the fact that a settlement for only one ski boot would be unreasonable as it was accepted that there was no residual use or value in the remaining, undamaged ski boot. Ms A accepted payment for the full cost of the ski boots, less a small element of depreciation.

Mr P came to MFSA in 2006 with a rather complicated case relating to two insurance policies he had purchased, one in the late 60s (a whole of life policy) and another, an endowment policy, in the late 70s. Mr P brought a pack of documents to MFSA, some of which unopened, of communication he had received from the two insurance companies. Mr P, who did not read or understand English, was unable to recall from whom he had purchased the policies.

The first policy denominated in sterling was issued by a UK company. There was no record how premium was paid to the company and it was not clear whether the policy was still effective. The second policy bought in the late 70s, was an endowment policy in Maltese lira issued by another UK company. Mr P was under the impression that this last policy was to mature on his 61st birthday and would pay out a hefty amount. He arranged with his bank for the annual premium to be paid by standing order from his savings account every October, to an account held by a local company which seems to have been the same company which sold the policy to Mr P.

The second policy matured in 2006 and a relative of Mr P wrote to the UK company asking for the money. The company replied saying that the policy had been paid up since 1981. Neither Mr P nor his anxious family were aware of what paid up meant. From the bundle of documents, it transpired that in 1980 and 1981 the UK company had sent a number of reminders to Mr P requesting payment of premium but Mr P did not give them much notice possibly because he assumed the standing order instructions would cater for that.

The matter became complicated even further when the local bank provided the Unit with copies of correspondence relating to the standing order. Sometime after 1981, the UK company merged. The original standing order instructions were amended in the mid-1980 in favour of this newly merged company. A new bank account was provided to the bank. Some five years later, the bank received a letter from the insurance company requesting a clarification about the annual premium as “the name and policy number do not agree to our records”. The bank, possibly acting on instructions from Mr P, confirmed that the policy number had been changed to that of the first insurance policy (the whole of life policy). Whether that was correct or not was anybody’s guess. Ten years after, the UK company appointed a local entity as its “run-off” agent.

In the meantime, the annual premium continued to be deducted from Mr P’s savings account without it ever reaching the UK insurer.

The local company in which the original standing order instructions had been paid for a span of around 12 years had been liquidated. Its liquidator had died some time after the company was declared defunct.

A substantial amount of premium (around €2,043) was unaccounted for. However, a further €1,770 (representing 14 years of premium) was traced to the account of the entity which was appointed as the run-off agent. The entity never questioned why the bank was paying this amount. It so happened that the bank had changed its systems and the details of Mr P’s policy in the standing order went missing. The entity managed to locate all the funds paid which had been allocated to a suspense account as “unclaimed”.

After various discussions with Mr P, his relative and even the Consumer Association, payment of the amounts held by this entity was made with compound interest. Regrettably the value which accrued on the endowment policy was rather minimal and no trace of any value on the whole of life policy could be found.

After 27 years, the standing order was stopped in 2006, the year Mr P celebrated his 61st birthday.

Mr X, the complainant, purchased a motor policy in 2001 from an insurance agency Y. During the period covered by the insurance, the complainant was involved in an accident with a third party insured with another insurance company. Since liability was not certain, the matter was referred to the Small Claims Tribunal. In the interim, the complainant’s original insurance agency ceased operating. In fact the judgement of the Small Claims Tribunal indicated that both the insurance agency’s representative and the complainant failed to appear before the Tribunal during the sittings. In this regard, the complainant claimed that he was never informed by the agency with regards to the commencement of the judicial proceedings. The case was decided in favour of the third party.

There was uncertainty as to who the underwriter was at the time when Mr. X filed his complaint with the Consumer Complaints Unit since he had lost all documentation. After some time, Mr. X managed to find his original Certificate of Insurance which indicated the underwriter’s identity. In the meantime, the insurance company issued a warrant of seizure against the complainant’s assets for the recovery of the expenses relating to the claim in question.

Regrettably the agency’s former directors did not offer much assistance. On the contrary, the underwriter’s local representatives, who apparently were not aware of the judgement, confirmed that the policy had originally been bound by their foreign underwriters. The claim was paid in full, together with legal expenses.

Mr B was involved in a car collision with Mr A. Mr B explains that Mr A emerged from a stop sign. The wardens were contacted and subsequently drew up a report. Mr B is insured on a Third Party basis. He contacts his insurance company and is informed that he has to open a claim with Mr A’s insurer. Mr B duly does so and is informed that Mr A had not yet contacted them about the accident. They promise to contact Mr A to ‘persuade’ him to lodge a claim. Mr B is not happy with the situation. Given the extensive damages, the car was towed to a garage. He is lamenting the fact that the longer Mr A delays in filing a claim, the greater is the inconvenience he is enduring through loss of use of his vehicle.

Mr A’s insurers confirm receipt of a copy of the warden’s report and send their surveyor, on a without prejudice basis (i.e. without admittance of liability), to survey Mr B’s vehicle. Mr A’s insurers confirm that, on the basis of the warden’s report, their client is to blame but unless their client files a claim and pays the excess (Lm100), they would not be in a position to accept liability and proceed with repairs. Moreover, should they accept liability, a replacement vehicle would be provided for the period the vehicle is being repaired and not when the vehicle is at a standstill waiting for parts to be sourced or, worse still, until Mr A decides to open a claim. Mr B would be informed that in terms of law any insured party who has been involved in an accident and who might have suffered or caused any damage or injury should inform his insurer of the accident within two weeks of the event. Whenever an insurer believes that there are reasonable grounds that he may have to pay a claim to an injured party but their insured fails or delays to open a claim, the insurer is obliged to treat that event as if a claim had been made.

In many instances, drivers like Mr A would lodge a claim with their insurer and would admit fault. In other instances, Mr A would lodge a claim but would refuse to admit liability. In such situations, the insurer would advise Mr A that from the
documentation at hand, it is likely that he was at fault. Mr A may accept or refuse the insurer’s recommendation. If Mr A disagrees with his insurer, he has to submit a reasoned opinion in writing and within a specific time-frame (within 10 days of receipt of an insurer’s written notice) as to why he is not accepting liability.

Failure to submit a reasoned opinion as to his refusal of liability normally leads the insurer to automatically honour the claim and proceed with repairing Mr B’s car. However, in certain instances, the insurer will inform Mr B that Mr A is contesting payment of the claim. The matter will probably be referred to arbitration or any other appropriate tribunal. Mr B will always be informed that the Consumer Complaints Unit is not an adjudicating body and that it will not be involved where liability has not been ascertained. Such cases fall within the remit of arbitration and Mr A would be recommended to seek legal advice (reference should be made to the legal provisions of the Motor Vehicles Insurance [Third Party Risks] Ordinance).

Mr A and Ms B had purchased a term policy through a bank’s life assurance representative. This policy was intended to serve as collateral for the banking facilities they held in joint names. Mr A had in his possession the documentation which was provided to him by the bank’s life assurance representative at the time he and his partner were considering the insurer’s proposition. This documentation illustrated that the initial premium was computed at €67 with a subsequent manual amendment – suggested by the same bank’s life assurance representative – altering the amount of the premium down to €50. The conditions of this life policy enabled policyholders to receive their total outlay of premia (the “cashback” element) at the end of the term, unless a death claim was submitted.

Mr A and Ms B argued that despite the premia being altered on the illustration document raised by the bank’s life assurance representative, the cashback amount was not duly amended to reflect the revised sum of €28,000 receivable on the lapse of the policy. Rather, the amount of €33,000, computed on the original premium of €67, was still shown on the illustration document which featured the date of the first meeting between Mr A, Ms B and the bank’s life representative. They claimed that the correct amount of the cashback should have been €33,000 as computed on the original premium.

The insurer maintained that the insured was entitled to full premium cashback at policy maturity, in other words, the policy promised to return the total amount of premia paid by the policyholders between policy inception and maturity. The insurer insisted that the policyholders should refer to the revised amount of €28,000 as indicated on the policy schedule and not the illustration document as this latter document was not binding.

The Unit requested clarification from the insurer as to the application of a discount on the premium originally quoted at the onset of the sale. The insurer confirmed that during discussions with the bank’s life assurance representative, Mr A and Ms B had made the representative aware that they were contemplating on procuring life cover from a competitor insurer and, therefore, the bank’s life assurance representative sought permission to discount the premium originally quoted. This prompted the Unit to seek confirmation from the insurer on the way the discount was computed.

The insurance company explained that it was empowered to apply discounts at its discretion on the basis of sound business. In this regard, to maintain the applicants’ custom, the company applied a discretionary 25% discount to the premium originally quoted. This discount effectively brought the premium down to €50. Despite the discount, the sum assured payable on death remained constant and was based on the computation of the original premium.

Following a review of the complaint, the Unit concluded that it was justifiable on the part of the life assurance company to compute the cashback element (€28,000) on the revised premium, representing the total amount of premium Mr A and Ms B had actually paid into the policy throughout the term of the policy. It therefore rejected Mr A and Ms B contentions.

Mr D claimed that his late father had been sold an investment bond and the financial intermediary had instigated his father to name him as the second life assured without his knowledge. The Unit requested copies of the original and amended application forms compiled by Mr D’s late father. It transpired that three years following the sale, the financial intermediary proposed Mr D’s father to consider the possibility of nominating any person (such as a member of the family) as a second life assured on his policy.

The financial intermediary proposed this course of action to enable the heirs to avoid potential early encashment charges which could be incurred if the death of the primary life assured (Mr D’s father) occurred during the early encashment period applicable on the investment bond. Mr D expressed his dismay in being added as the second life assured without being notified, further noting that his father’s will clearly stated that the proceeds of the investment bond were to be divided between the heirs.

When Mr D attempted to sell the underlying investments of the investment bond following the demise of his father, he was advised that he would incur a hefty surrender charge given that the policy was being surrendered in the early encashment period.Mr D once again contested that this addition was decided by his father without him ever being consulted. The complainant further alluded to the levying of extensive charges on the remaining holding in the bond citing in particular the annual management charges. The financial intermediary reiterated the advantages of adding a second life assured, further referring to steps being taken by the intermediary itself to recommend to all clients invested in this bond category to add a second life assured.

The financial intermediary further maintained that the heirs had exercised their personal choice by proceeding to surrender the policy despite having the option to keep it and maintained that they were in no way disadvantaged by Mr D’s late father decision to add a second life assured. The intermediary reiterated the position that it did not advise the father to nominate specifically Mr D as a second life assured. The decision was left solely at his discretion and the intermediary was not obliged to divulge this information to a third party. The entity was barred from disclosing clients’ volitions to any third party.

During the review process of the complaint, Mr D informed the Unit that he had sold a substantial part of the underlying investments comprising the investment bond, to the extent that hefty penalty charges had been triggered. Mr D complained that, other than these charges, the heirs had also suffered a capital loss. It transpired that Mr D executed the redemption transactions out of his own volition and without seeking advice.

On the basis of its extensive review, the Unit was unable to establish that the entity had acted negligently throughout its professional relationship with Mr D’s late father. In this regard, the Unit was unable to uphold the complaint.

Ms T took out a personal loan to purchase some new furniture for her residence and her bank obliged her to take out a life policy as security against her loan. Voluntarily, Ms T decided to add a disability benefit to her policy to have peace of mind since she was the sole wage earner in the household. A few years later Ms T suffered from a heart problem and was hospitalised for a few days. The doctor advised Ms T to stop working for at least a couple of months as she had to undertake treatment in relation to her
medical condition.

Consequently Ms T lodged a claim with her insurer for disability benefits in order to cover her monthly loan repayments for the duration of her disability. Sometime later Ms T received a letter from her insurance company informing her that after taking into consideration the events that led to her medical condition, it would not be honouring her claim. Her claim had been rejected on the basis of a false declaration of health at application stage.

When completing the application form for her insurance policy Ms T had declared that in the previous three years she had not taken any regular medical treatment. The insurance company sustained that from the medical information obtained for the assessment of the claim it was evident that Ms T had made a false declaration. The insurance company explained that, as the medical history was material to the declaration made, it was unable to accept the claim.

When the medical records of Ms T were examined, it resulted that Ms T had suffered from acute chest pains two years prior to her claim. It appeared that Ms T had also received physiotherapy treatment and was, as at the date of the claim, still attending to stress therapy sessions. Ms T was also a heavy smoker (another aspect which she did not disclose in the proposal form).

The insurer’s medical doctor was of the view that Ms T’s medical history presented a significant health risk and proposed a rating of +100% on the premium. The insurer, however, rather than rendering the policy void due to non-disclosure, decided to invoke the proportionality principle. This effectively meant that the insurance company would apply the +100% rating and consider a proportionate payment subject to the company having the right to obtain expert medical opinion to check that the disability stated was and remained justified.

The Unit was of the view that the offer that had been made by insurance company was fair and reasonable given the circumstances surrounding the claim.

Ms L, who resides in another European member state, purchased a motor insurance policy issued and underwritten by a Maltese insurance company, through her local insurance broker. She lodged a complaint with the MFSA after a claim she made with her Maltese insurer was rejected. Ms L filed a claim with her insurer following an accident involving her vehicle which was being driven by her sister Ms M. The insurer rejected the claim on the basis of misrepresentation by Ms L at policy inception.

According to the insurer, the vehicle was actually owned by Ms M, who held a provisional driving licence. Ms L was named as the main driver and insured under the policy. According to the insurer, Ms L was already insured as a first driver on her own vehicle and therefore had no insurable interest under this vehicle (which was owned by her sister).
Ms L disagreed with the views of the insurer and insisted that her sister used the car occasionally, mostly during weekends and that she was the main driver of the vehicle. Furthermore, she claimed that neither the insurer nor the broker ever informed her that she could not be the main driver on two separate policies and
therefore such an arrangement should have been rejected by the insurer in the first place.

As part of the investigation, the Unit requested a copy of the completed proposal forms for both Ms L’s and Ms M’s cars. The insurer informed the CCU that had the car been insured directly in Ms M’s name, the premium would have been much more expensive. It so happened that Ms L was named as the main driver so that Ms M benefits from her sister’s ‘experienced driver discount’. The insurer confirmed that it acted on information received directly from the broker appointed by Ms L.

Following an examination of the documents, it was clear that the same experienced driver discount was used twice to incept the two policies and, indeed, the policy covering Ms M’s vehicle had also benefited unfairly from the experienced driver discount. As the insurer’s system could not match the data of the two policies, the insurer simply acted on the information contained in the proposal forms and completed by the broker. The Unit discussed its findings with Ms L and Ms M and explained why it deemed the complaint against the insurer had no grounds to be justified. Ms L confirmed that she had also initiated a complaint against her broker with the financial ombudsman in her country and was awaiting the outcome of his investigation.

Additionally, the Unit informed the ombudsman of its findings and agreed with its views that the insurer acted on the information provided by a third party, in this case the broker, who was at the time representing the complainant. The complaint was not upheld.

Mr C’s car was flooded following a heavy storm. Mr C filed a claim under his comprehensive motor insurance policy and his insurer directed him to a repair garage of its choice. All was well until after a couple of weeks later the car stopped functioning. Mr C immediately contacted the garage, at which the repairs had been done and he was informed that in order for his vehicle to be serviced, a charge of €200 would apply. Finding this excessive, Mr C contacted his own repairer who opened the vehicle’s gearbox and confirmed that it had not been checked during the last repair works and was still full of rain water. This had caused his vehicle to stall.

Seeing that the insurer’s appointed repairers may be at fault, Mr C instructed his repairer to stop the work so that he could inform the insurer. When contacted, the insurer refused to send a surveyor to Mr C’s repairer since works had already started without its authorisation and consequently denied any liability. The insurer argued that since Mr C had contacted his repairer rather than the insurer’s appointed garage, he prejudiced their position. Mr C found this to be unfair.

The Unit immediately contacted the insurer to try and find an amicable solution. The insurer refused to accept liability and reiterated its position that Mr C had breached the policy condition which required the policyholder to inform the insurer of any damage for which it may be liable. Nevertheless, the insurer agreed to make a goodwill payment equivalent to the cost of purchasing a second hand gearbox, given that the existent gearbox was also second hand, but excluding labour costs given the breach of condition.

The Unit agreed that the insurer’s offer was fair and reasonable. The complainant therefore obtained the cost of the parts but had to pay for labour.

Mr M, an EU national, was looking to change his health and sickness insurance provider and was interested in an offer by X Insurance Ltd (a Maltese registered entity operating in another EU member state under freedom of service). The insurance company promised that the entire premiums paid under his health and sickness policy would be refunded if no claim was made within the first 12 years of the policy. Enticed by this offer, Mr M purchased the policy and he arranged to pay the monthly premium by direct debit.

Two years after inception, he received a letter from the insurer informing him that there would be a premium increase of 30%. Mr M was aware of the financial turmoil at the time and since he was happy with the cover he decided to pay what seemed to be a one-time increase in premium. However, a couple of months later the insurer informed Mr M that the company could not honour the promise it had made at policy inception.

It offered Mr M three possibilities, from which he was invited to select one. The first offer consisted of a reduction in premium if the initial 12 year cash back offer is forfeited; the second offer was to maintain a similar premium to the one Mr M was paying on his existing policy but only 50% of all the premiums paid would be refunded if no claim was submitted in the first 12 years and the third offer was to choose another policy with better benefits but which offered no cash back option.

Mr M decided to ignore the offers made to him by the insurer and maintained his existing cover. The following year however his premium was again increased, this time by a further 30% with another 15% increase the following year. Mr M saw this as unfair as he was never told that the premium could increase at such a high rate for no justifiable reason. He argued that the selling point of the policy was always the fact that he would receive back the premiums paid after 12 years claims free and if premiums continued to increase at that rate he would no longer afford to keep the policy. Following an unsatisfactory outcome of the complaint lodged
with the insurer, Mr M decided to complain directly with the Unit.

The Unit initiated discussions with the insurer and requested a copy of all the documents and marketing material provided to Mr M at the time the policy had been sold. It was immediately clear that the focus of the marketing material was the cashback element on the 12th anniversary rather than on the actual cover. A copy of the full terms, which made reference to a possible increase in premium, was only provided to Mr M after the policy was purchased. It was also evident that although Mr M had been given a key features document - which admittedly was quite clear in the way it explained the policy’s advantages and characteristics – there was no indication that revisions to the premium were possible at the discretion of the insurer. In fact, such discretion was only included in a particular clause in the terms and conditions.

The Unit found the insurer’s sales pitch to be unfair as well as its unilateral discretion to increase premium and renege from the promise to repay full premium on the 12th anniversary. In addition, the Unit was of the view that selling a health and sickness policy on the basis of a cashback rather than the actual cover was misleading. The Unit therefore upheld Mr M’s complaint and the company accepted to refund all premiums Mr M had paid. The policy was also terminated.

Ms Z purchased a second hand vehicle in 2011 which came with an extended warranty subscription acquired by the previous owner. When the vehicle was nearing the 60,000 km mark, she started hearing a noise in her engine and took her car to an authorised dealer for a service. The dealer refused to service the vehicle as he noticed that the engine had some damages. Not being adequately assisted, Ms Z opted to invoke the extended warranty certificate and contacted another authorised repairer. The vehicle was subsequently towed to a different garage.

Serious damages were discovered in the engine and repairs in relation to such damages amounted to approximately €13,000. At this stage, Ms Z was informed that the repairs would not be covered by the policy as the damages resulted in consequence to lack of maintenance. Ms Z denied that she did not look after her vehicle as required by the policy and decided to lodge a complaint.

The insurance company provided the Unit with all the necessary documentation, including policy documents and service sheets and explained that every car has its particular routine maintenance requirements which need to be adhered to for the extended warranty policy to remain valid. This was made clear by the sales person who assisted Ms Z and, more importantly, was well explained in the policy document.

Upon examination of the documents provided, it was clear that when Ms Z purchased her vehicle in 2011, she was required to carry out two maintenance services up to 2013 but had only done one in 2011 a few months after purchase. From the vehicle’s service history, the unit confirmed that no other services had been performed on the vehicle in the meantime. This was clearly in breach of the terms and conditions set out in the policy and the complaint could not be upheld.

Mr C took out a loan with the intention of purchasing a new car and the bank obliged him to take out a Gap Insurance policy which would cover him for the difference between the actual cash value of the vehicle if it were destroyed and the balance still owed to the bank. A couple of months after taking out the loan, Mr C was involved in an accident and his car was declared a total loss.

The total loan amounted to €12,000, €10,000 of which were allocated to the purchase of the vehicle and the other €2,000 reserved to pay for the policy premium for seven years, being the duration of the loan. Given that Mr C was not at fault, the third party insurance reimbursed Mr C with the value of his car. Mr C was still obliged to pay the amount of €1,800, being premium for the Gap Insurance and the interest due on the balance. Mr C found this to be unfair as he had to pay for a policy under which he could never claim since his car had been written off.

The Unit contacted the insurance company which underwrote the Gap Insurance policy to obtain more information and documentation on Mr C’s case. The company provided the documents and informed the Unit that it was looking into the case afresh and would provide feedback in due course. The contract terms were clear in that the premiums were still due and had to be paid. Nevertheless the company contacted Mr C directly and offered to waive the premiums due and refund him the excess he had paid under his policy and related costs to acquire the police report. Mr C accepted the company’s offer and the case was closed.

Mr Y parked his vehicle in the parking area of a shopping mall he usually frequented. A couple of days later, he was informed that a third party had opened a claim against his insurer following damage to his vehicle allegedly caused by Mr Y on the day he went to the complex. Mr Y was instructed to complete and submit an accident report on the matter.

An assessor was appointed to inspect the car but it was clear that there was no sign of any damage on Mr Y’s vehicle and photographic evidence altogether showed that the damage had been caused by an opening of the passenger’s door rather than the driver’s door. Mr Y complained with the Unit stating the insurance company should never have accepted to settle the claim on his behalf without giving him the opportunity to express his views.

Following a number of exchanges between Mr Y and the insurer, the mistake was rectified and the No Claims Discount was reinstated. However, the insurer did not delete this incident from Mr Y’s claims history. Mr Y argued that this was prejudicial in his regard as it may affect his ability to apply for insurance with another
company in the future or make it more expensive to do so. When contacted, the insurance confirmed the events as detailed by Mr Y and confirmed that due to an administrative oversight the claims history was not amended. Consequently, the insurer issued an amended document expunging the claim from Mr Y’s claims history and promised to grant MrY a discount on his next renewal premium as a gesture of goodwill for the inconvenience caused.

Mr G, a resident in an EU country, purchased a motor insurance policy from an insurer established in Malta and which was providing such insurance products under freedom of service. In his complaint form, Mr G explained that the insurer disposed of his vehicle without his permission and while he was still the legal owner of the vehicle. He explained that the claim process with his insurer had not yet been settled when this happened. The insurer had initially told Mr G that he could eventually buy back his vehicle, only for this proposition to be subsequently reversed as the vehicle had already been scrapped.

The main issue of Mr G’s complaint was the fact that he was not given the opportunity to salvage anything (including personal belongings) from his car. He explained that the aftermarket audio equipment installed in his vehicle was also scrapped. Mr G insisted that this was unfair and asked for his audio equipment to be replaced as this was not damaged when he collided in another vehicle (and which subsequently led to the claim with his insurer). He insisted that the aftermarket audio equipment was insured separately
under his policy.

The Unit contacted Mr G’s insurer who immediately confirmed that a survey had been carried out and the vehicle was classified as a write-off. Fault for the accident was also attributed to Mr G and the claim was handled accordingly. The insurer also confirmed that according to its policy terms and conditions the owner was not allowed to buy back the vehicle.

The surveyor who inspected the vehicle had established a pre-accident value for the vehicle, incorporating the audio equipment. The surveyor sustained that the audio equipment could not be considered as a personal belonging since it was permanently fixed to the vehicle. Furthermore, the request to dismantle the audio equipment was made after the insurer had made a settlement offer, at which point the vehicle had already been transferred to a claims management company.

The Unit pointed out to the insurer that the salvage from a car remains the policyholder’s property until settlement has been agreed. Insurers were not entitled to dispose of the salvage without the policyholder’s express permission. Where there is some unusual delay in reaching an agreement, as happened in this case, the insurer would be obliged to ask for the policyholder’s permission to dispose of the salvage. Furthermore, the vehicle had been classified as a write-off, which effectively meant that although it was uneconomical for the insurer to repair the car, the car was in fact repairable. It was therefore clear that the insurer had rushed matters and should have never sent the vehicle for scrapping before it obtained consent from the insured.

The insurer agreed with the views put forward by the Unit but could not refund the amount being asked by Mr G for the audio equipment as this had not been substantiated with receipts. An agreement was finally reached for a goodwill payment of €350 which was accepted by the complainant.

During a storm in January 2013, Ms V’s car was parked in her drive-in and, similarly to other vehicles, suffered damage. Initially she thought that the damage was minimal but whilst cleaning her car around April she discovered that the damage was worse than she had originally presumed. She lodged a claim with her insurer but was informed that the excess on her policy was high and it may not be worth opening a claim as her No Claims Discount would also be affected.

Later on that same year she took her vehicle to a panel beater who informed her that repairs would amount to over €1,200. She therefore decided to open the claim but her insurer refused to reimburse her on the basis of late notification. She decided to lodge a complaint with the Unit because she was of the view that, as she had already raised the matter with her insurer in April but was discouraged from claiming, the insurer’s decision to refuse the claim was unfair.

As part of its investigation into Ms V’s complaint, the Unit had several exchanges with the insurance company which was instructed to look into the case and revert with feedback. In the meantime, the Unit also asked for photographic evidence to be provided and had a number of meetings with Ms V to clarify the reason for the delay. It transpired that although it was clear from the evidence provided that the car had been damaged, Ms V had no proof of the origin of the damage and, given that quite some time had passed, the insurer rejected her photographic evidence.

In fact, the insurer confirmed their original stance to reject Mr V’s claim because it was not lodged within a reasonable time. The insurer argued that even if it had to take into consideration the first time Ms V approached the company with the intention to claim, she had delayed in informing the insurer three months from the date of the alleged damage. The insurer quoted the terms of the policy which clearly stated that a policyholder is bound to inform his insurer immediately of any circumstances which may give rise to a claim. Therefore, this was clearly in breach of policy conditions. Furthermore, the insurer argued that it could not verify the source of damage due to such lapse in time and refused to send a surveyor to inspect the vehicle. This delay could also have increased the repair costs for the insurer without any justification.

On the basis of incomplete information on the part of Ms V, the complaint could not be upheld.

Mr X was the owner of a vehicle which was insured under comprehensive cover. During the hail storm, Mr X’s car was extensively damaged. He lodged a claim with his insurer for his vehicle to be repaired. The company instructed Mr X to take the car to a repairer of his choice and instructed the surveyor to assess damages. A few days after the survey had been carried out, Mr X was informed that a survey report would not be issued because the insurer – following a number of identical complaints – brought in foreign repairers to apply a new methodology for damages caused by hail which was, apparently, more cost-effective compared to traditional repair works.

The insurer informed Mr X to take his vehicle to a specific repairer but he refused claiming that, as he was insured on a comprehensive basis, he had the right to repair the car at a garage of his choice citing that the repairers proposed by the insurer were of an inferior standard. On the other hand, the insurer invoked a policy condition which gave them discretion in regard to the manner and extent a vehicle may be repaired.

The insurer rejected Mr X’s opinion and Mr X lodged a complaint with the Unit. The insurer confirmed that a survey report had actually been prepared and damages had been quantified at around €2,500. The insurer claimed that the new methodology for repairing hail damages carried a two year guarantee and would not impinge on the market (resale) value of the vehicle as no hard metal and repairer paint will be used. Mr X refused to take his vehicle to one of several garages which were offering similar repair works using the new methodology.

During the Unit’s review of the complaint, it transpired that at the time the survey had been carried out, the insurer had not yet been instructing claimants to repair hailstorm damages at particular garages. Its website also confirmed that policyholders holding comprehensive cover could decide where they wish to have their vehicle repaired and inform the company.

The Unit, following lengthy considerations, recommended that Mr X’s repairs should be carried out at a garage of his own choice. If the insurer offered a cash settlement, the amount should reflect the estimate in the first survey. The insurer rejected the Unit’s recommendations. Although it suggested that a meeting between Mr X and the insurer be held for the purpose of reaching a solution acceptable to both, Mr X decided to refer the case to mandatory arbitrage.

Last updated: Sep 07, 2016