Disclosure or Exposure...?

Submitted: Thursday, Jan 04, 2018 at 08:09
ThreadID: 136051 Views:1712 Replies:6 FollowUps:19
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I received this from Club 4x4 Insurance whom I insure my vehicles with. It is a short but pertinent article on disclosure requirements when taking out insurance.

Insurance is often discussed in the forum and questions often range to whether the insurer has a good payout record. Disclosure is one area that can be contentious and possibly lead to failed claims or reduced payouts.

Thought it worth highlighting for those with an interest.

Disclosure or Exposure?

Cheers, Baz - The Landy
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Reply By: Michael ( Moss Vale NSW) - Thursday, Jan 04, 2018 at 09:05

Thursday, Jan 04, 2018 at 09:05
Hi Baz, I just insured my ageing Patrol with Club 4x4 for the first time. I read that at the time of my decision to go with them, I think the points they make are valid and reasonable. In case of a claim, we expect the insurance companies to honour their side of the policy and the insurance company expect the policy holder to disclose accurately, as the policy premium is based on risk to the insurance company. I would rather be totally upfront and if the worse happens, you can rest easy and know the claim will go through smoothly. Michael
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Reply By: Life Member - Duncan W (WA) - Thursday, Jan 04, 2018 at 10:41

Thursday, Jan 04, 2018 at 10:41
Thanks Baz, I don't have to open their email when I get home now. Interesting that they mention infringements. Most people would never contact their insurers when they get pinged for speeding or whatever. There was a case here in the west some years back where a jockey, I think he was, was in a prang and tried to claim on his insurance when they discovered that he hadn't notified them of his previous driving infractions the insurer refused to payout.

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Dunc
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Follow Up By: Shaker - Thursday, Jan 04, 2018 at 11:32

Thursday, Jan 04, 2018 at 11:32
You are expected to disclose anything that has happened in the previous 12 months that may affect insurers risks, or decision to grant insurance cover at the time of renewal.
That may include some traffic violations, minor damage to the vehicle or extra modifications.

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Follow Up By: Motherhen - Sunday, Jan 07, 2018 at 00:37

Sunday, Jan 07, 2018 at 00:37
And notify of any events during the current year, such as infringements, for yourself and other family members who may drive the vehicle. And yes, it was well publicised when a claim was denied because the insurer had not been notified of a recent ticket. This occurrence would not be the norm, but it shows it can happen.

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Follow Up By: Frank P (NSW) - Monday, Jan 08, 2018 at 11:57

Monday, Jan 08, 2018 at 11:57
The requirements are clear in regard to licence suspensions and cancellations, and insurance claims, but I was uncertain about disclosure of minor infringements.

I just enquired with Club 4x4 about disclosure of minor traffic infringements - ie on-the-spot or camera detected infringement with fine and points.

I was told they (Club 4x4) only become interested if you have five or more in the last three years.
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Reply By: mountainman - Thursday, Jan 04, 2018 at 14:33

Thursday, Jan 04, 2018 at 14:33
Its nothing new.
Standard practice across the board on vehicle insurance.
Its just no one reads the 50page little booklet you get "OFFERED" at time of policy or delivered in the mail.
No different to visa cards and the similar sized books the banks send out

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Follow Up By: Baz - The Landy - Thursday, Jan 04, 2018 at 14:39

Thursday, Jan 04, 2018 at 14:39
For sure, it is nothing new, but as you mention some people don't pay enough attention to their obligations and blame the insurer when claims are reduced or rejected.

So this is a timely reminder from Club 4x4 - it would be great to see other insurer's being as pro-active as this company when it comes to information, and importantly, education on insurance matters.

Cheers, Baz - The Landy
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Reply By: Michael ( Moss Vale NSW) - Thursday, Jan 04, 2018 at 16:02

Thursday, Jan 04, 2018 at 16:02
Baz! I was impressed how the policy is offered up. It's plain talk and to the point and they put themselves out there as a support for off-roaders and say they understand our needs. So with that explained by them, there should be no misunderstanding about their obligations. That said, Policy holders should uphold their side of the agreement. Michael
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Reply By: Member - McLaren3030 - Friday, Jan 05, 2018 at 12:14

Friday, Jan 05, 2018 at 12:14
I asked for a quote from Club 4X4 for insurance for my previous 76 Series LC, when I informed them that it had a performance chip, (Steinbauer), they refused to offer a quote. They consider all chips to be an engine performance modification. So be careful that you disclose if you have a performance chip. If not and you have a claim, they have every right to refuse your claim.

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Follow Up By: Shaker - Saturday, Jan 06, 2018 at 12:34

Saturday, Jan 06, 2018 at 12:34
They had no issue with insuring mine, DPChip was openly declared on the list of modifications & accessories!

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Reply By: The Bantam - Friday, Jan 05, 2018 at 17:02

Friday, Jan 05, 2018 at 17:02
This is an issue that those with extensive and possibly illegal modifications simply don't want to talk about.

I had a customer some years ago that auctioned damaged vehicles for a major insurer ....... I got talking to the insurance company mechanic who used to look after the impound ....... yeh they are not stupid ...... all the insurers have an impound with a line up of vehicles associated with disputed claims ... some are much less generous than others.

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Follow Up By: The Bantam - Friday, Jan 05, 2018 at 17:06

Friday, Jan 05, 2018 at 17:06
Think about this ....... lifting 4wds and fitting bigger tyres is very very common on 4wds.

4wd's rolling over is also very common.

If you have a vehicle lifted beyond and fitted with tyres bigger than the VSB14 guidlines ...... it would be quite reasonable for an insurance company to reject a claim on that bassis.

So there is your $50 000 4wd %$#@!ed and the insurance company says ..NO.

cheers
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Follow Up By: Baz - The Landy - Friday, Jan 05, 2018 at 18:13

Friday, Jan 05, 2018 at 18:13
Hi Bantam

My viewpoint is that if you do any type of modification to a vehicle, whatever it is, be sure to check with the appropriate people (not the salesperson selling it) that it complies with the registration laws and requirements in the State of registration.

If it doesn't and the modification is deemed to make the vehicle "unroadworthy" then many insurers may well reduce your claim in the event of an accident or reject it entirely. Which is the point you highlight.

Lifts and bigger tyres are an obvious one - and yet you see them everywhere. Perhaps some have been approved and signed-off as compliant, but I suspect many are not.

Overall I think most insurers are reliable in terms of paying out, providing the person seeking the insurance for a vehicle is upfront and honest, and disclose all modifications when entering into the insurance agreement. Which is the thrust of the article written by Club 4x4.

Cheers, Baz - The Landy
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Follow Up By: Member - silkwood - Saturday, Jan 06, 2018 at 20:08

Saturday, Jan 06, 2018 at 20:08
One thing that bothers me when it comes to vehicle insurers is that they are exempt from the Consumer Guarantee law which states an item is warranted against any issue or factor which is stated (either in written or verbal form) by the sales agent prior to purchase.

For instance, if you say you want to purchase a hand truck to move your 80kg plant around the yard and the salesperson says "this one would be perfect", it doesn't matter if, after the hand truck breaks you notice it has a lifting capacity of 50kg. The sales agent specifically recommended it after you told them your required use. You are entitled to a refund.

If, however, you state all of your modifications on an insurance application, I have heard many say "it's okay, my insurance knows I have this mod". Wrong. Regardless of their acceptance of the policy, if your mod turns out to be illegal, and is involved in the cause of an accident, they can refuse to pay.

I'm looking for insurance for a vehicle I am about to take delivery of and have considered Club 4x4. What concerns me is the reports of their requesting police records of convictions AFTER the time you took out the insurance.
1. They insured you for the risk you presented at the time, not since (I do not know how they use this data, but the fact that they request it bothers me).

2. I have never had another insurance company ask this. Does this tend to make anyone else think they may be more assiduous in looking for opt-out excuses?

Genuinely interested in other's thoughts on this. The flexibility of their policies is appealing.

Cheers,

Mark
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Follow Up By: Shaker - Saturday, Jan 06, 2018 at 23:19

Saturday, Jan 06, 2018 at 23:19
Of course they are entitled,to know anything that may affect their risk, particularly if it is a conviction for dishonesty.
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Follow Up By: The Bantam - Sunday, Jan 07, 2018 at 09:11

Sunday, Jan 07, 2018 at 09:11
Mark - Silkwood ... the difference is that Insurers are required to issue product disclosure statements and contracts, and are subject to specific laws and precidents.

It is known and understood that those are what matters, not what any salesman says.

cheers
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Follow Up By: Member - silkwood - Sunday, Jan 07, 2018 at 09:46

Sunday, Jan 07, 2018 at 09:46
Bantam, what "is known" is that, almost alone amongst service providers, the insurance industry negotiated this "out" with the government around 2009, precluding the requirement of this sector to comply with implied sections of the guarantee.

If you are told (verbally) that something is suitable for purpose (regardless of what is written in the guarantee or contract) then you have recourse to refund and/or compensation. The contract cannot be held to overcome such verbal guarantees or implications.

The insurance industry (and some sections of the finance industry) are exempt from this. The contract overrides (almost) all. This allows an insurer to sell you a product which may not cover your needs, even though you have declared an issue up front (for example, you can note on your content the inclusion of tyres and lift kit which takes the overall increase in vehicle lift to 60mm. If the vehicle rolls and it can be argued the lifted nature had an impact upon the accident, the insurer can refuse coverage due to the illegal modification).

The argument from the insurance industry appears to be that they cannot be expected to police compliance with all the myriad regulations. Funny, we are expected to, and expected to comply with the complexity of their contracts.
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Follow Up By: Baz - The Landy - Sunday, Jan 07, 2018 at 12:27

Sunday, Jan 07, 2018 at 12:27
Hi Mark

"Regardless of their acceptance of the policy, if your mod turns out to be illegal, and is involved in the cause of an accident, they can refuse to pay..."

With regard to this point, the over-arching requirement for most, if not all, insurers' is that the vehicle is in a roadworthy condition and complies with the State registration laws. Whilst you may disclose a modification it remains your responsibility to ensure the vehicle is roadworthy and complies for registration.

This is usually made quite clear in the PDS accompanying the contract of insurance.

There are many modifications that might render a vehicle unroadworthy (as a definition) unless approved and certified by an engineer.

For example, you might notify the insurance company that your vehicle is fitted with 35" tyres, but it will remain your responsibility to ensure it complies with the registration requirement of the vehicle - which may require an engineer to sign it off.

If you were rear-ended having this modification without an engineer's certificate it is most unlikely you would have an insurance claim rejected, but roll the vehicle and it might lead to a reduced or rejected claim.

I'm using tyres as an example as it is an obvious one that I see almost every other day and perhaps some are certified, I suspect many are not.

And there are many modifications that require certification - for example in NSW, an auxiliary fuel tank fitted requires a sign-off, so does changing the original one if it's attachment to the vehicle is different to the original.

Many modify vehicles blissfully unaware that they are potentially opening the door for a legal nightmare. Perhaps many people don't believe it will ever happen to them.

My recommendation to anyone contemplating any kind of modification to a vehicle is to check with an engineer what the requirements are to ensure ongoing compliance for registration - don't rely on the salesperson selling the product.


Cheers, Baz - The Landy
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Follow Up By: The Bantam - Monday, Jan 08, 2018 at 13:18

Monday, Jan 08, 2018 at 13:18
Silkwood, the insurance industry is subject to a whole seperate system of consumer law ... and so it should be it is entirely different to any other purchase.

No physical purchase requires a polocy statement and a product disclosure statement ...... you have to sign a contract before entering into an insurance deal ..... and your signature indicates you have read the contract and the discloure statement. ... that is vastly different to any "simple purchase".

What the salesman says verbally ... has absolutely no part of an insurance contract.

cheers


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Follow Up By: The Bantam - Monday, Jan 08, 2018 at 13:27

Monday, Jan 08, 2018 at 13:27
Baz ... as I am sure you understand there are a whole pile of issues with 4wd modification that many people just don't want to talk about.

With lifted vehicles, "bumper alignment" is a very real issue ...... there is a range of bumper heights specified in the ADRs, and for very good reason, then there is the issue of underbody parts becoming exposed ...... lifts and high clearance bullbars may expose parts that are required to be protected from pedestrian and other impacts.

Almost every 4wd that is lifted beyond the 75mm mark probably has bumper alignment or underbody exposure issues ...... that could be a factor in pretty much any collision with a standard vehicle or a pedestrian.

If an insector that knows his/her business where to examine pretty much any highly modified vehicle regardless of engineering or certification they are very likley to be rejected on bumper alignment, underbody exposure or protrubance issues.

cheers
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Follow Up By: William P - Monday, Jan 08, 2018 at 13:31

Monday, Jan 08, 2018 at 13:31
Bantam you said "What the salesman says verbally ... has absolutely no part of an insurance contract."

Under the Corporations Law (not consumer law) any commitment that an agent of a company provides, irrespective of what a written contract says, forms part of the contract and obliges the service provider to comply.

The issue is proofing the verbal statement, easier said than done.
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Follow Up By: The Bantam - Monday, Jan 08, 2018 at 13:50

Monday, Jan 08, 2018 at 13:50
Not if it is insurance
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Follow Up By: William P - Monday, Jan 08, 2018 at 18:23

Monday, Jan 08, 2018 at 18:23
If you say so - go study the Corporations Law - agent/company relationship and the relevant case law.
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Follow Up By: The Bantam - Monday, Jan 08, 2018 at 19:20

Monday, Jan 08, 2018 at 19:20
How about you go study Insurance law and be able to quote chapter and verse of the specific legeslation related.

then get into constitutional law and find out what over rides what.


The insurance contracts and the product disclosure statements are in writing .... even if there is some sort of overarching principle it comes to he said she said V written and signed documents ....... yeh right
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Follow Up By: Kenell - Tuesday, Jan 09, 2018 at 09:03

Tuesday, Jan 09, 2018 at 09:03
The original thread relates to disclosure obligations that apply not only to all intending insurance customers at inception but also at renewal. Insurance policies run for one year and the renewal offering is essentially a new contract. An insurer can't change the policy during its currency unless it offers a benefit to the insured nor can it use information that has changed since the inception / renewal to avoid a claim such as a DUI conviction. It can avoid a claim though if the customer materially changed the vehicle. Many insurers seek proof of driving convictions or criminal history when claims are made but can only use that info against the disclosed information. As for what an agent (authorised rep) says at time of completion of a policy or renewal - it is indeed relevant and can be drawn into any dispute. The AR (Club 4x4 for example) is the agent of the insurer and must keep detailed records of discussions. William P is correct the Corporations act requires this. It is difficult to prove from a customer's perspective unless he/she also kept a record. Ask for a confirmation email from the AR when such matters are discussed.
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