Account of the case
According to the accident report of 12 March 2020, on 4 March 2020 the Customer (later in the text A) had turned with his car from the K-road to the parking area. The car started to slide and hit a tree. The drawing in the accident report form indicated that the damaged places in the car were the right corner front and the rear right. In the form section “road surface”, the box “snowy or icy” was ticked.
According to the claims settlement of 19 August 2020 by the Insurance Company, the loss surveyor had found that right front corner of A’s car was so damaged that it could no longer be repaired at a reasonable cost as intended by the policy terms. The damage in the rear was not compatible with the way A had reported. The damage in the rear of the car were caused by forces from various directions.
For the purposes of determining the fair value, A had given the Insurance Company information on the vehicle condition prior to the loss event. In the information provided, A told that the vehicle was, in all aspects, in good condition which means, on the three-level scale used, that the vehicle had no problems or faults requiring repair. The expert statement by C Oy shows that the motor made a strong rattling noise, getting more frequent as the operating speed of the motor was increased. The noise could be distinguished from the normal motor running sound at the driver seat, even when the doors and windows were closed. The motor oil level in the dip stick was about 4 centimetres above the higher mark. The motor oil was found to be black and its fluidity was almost that of water. Metal particles were detected in the oil. The observations suggested that there were connecting rod had bearing damages at least in the connecting rod of one cylinder of the motor. The rattling noise was very loud even in idle running. Based on this, the damage had progressed and had been there for a longer period. The observations suggested that the crankshaft journal and the bearing housing of the connecting rod were worn in the spot of the damaged bearing, to the extent that the current crankshaft would no longer be used in the repairs but the whole motor would have to be replaced to repair the problem.
Due to the motor trouble, A’s vehicle was towed to a garage called D Oy on 13 January 2020. According to the information provided by the garage to the Insurance Company, the motor made an extra internal noise, the reason of which was not investigated in more detail. The motor damage was not repaired but A picked his car up from the garage.
According to the statement by C Oy, the fair value of A’s vehicle, based on its factual condition, would not have exceeded € 1,200.
Further to the statement, the fair value as per the information on vehicle condition provided by A would have been maximum € 5,700.
Based on the meteorological station data in the site of the Finnish Meteorological Institute, the air temperature at the three weather stations closest to the place of the accident had been above zero degrees centigrade throughout the 24 hours of the day in question. Two of these stations also measure the snow depth which had been 0 centimetres at the time of the damage.
According to the information provided by A, the motor status and general condition of the vehicle were good and, as far as it was known, there was nothing else wrong with the vehicle technical systems. In actual fact, the motor of the vehicle had fundamental problems already before the crash since the damage to the bearing could not have resulted from the crash. In the Insurance Company opinion, A must have been aware of the trouble in the motor since the motor had made a strong rattle audible inside the vehicle. Moreover, the awareness of the motor damage is supported by the fact that a little earlier, the vehicle had been towed to the garage because of an extra noise from the motor. A must also have known the damage in the rear of the vehicle was not caused by the crash reported by A.
In the circumstances of the collision with the tree, A reported having driven 20-30 km/h when the vehicle started sliding on the icy or snowy road surface making A collide with a tree.
The Insurance Company representative has visited the place of damage reported by A, taking photos. The road from where A allegedly and accordingly to his report would have gone off the road against a tree to the right side of the tree, is not only even but exceptionally wide, being 6 meters in width. Based on common life experience, it is not credible that under these circumstances, driving at the speed reported by A, the control of the vehicle could be lost due to skidding with a consequence of the vehicle colliding with a tree. Moreover, the data recorded by the weather stations suggest the opposite, or that the place of damage would not have been slippery at all.
The Insurance Company finds that A has failed to give a credible explanation of the course of events leading to the collision with the tree, as required by Section 69 of the Insurance Contracts Act. In addition, the Insurance Company finds that A has provided incorrect information deceitfully on the vehicle condition, as referred to in Section 72 of the Insurance Contracts Act. For the above reasons, the Insurance Company would not pay any compensation. According to the Insurance Company, the compensation would not be paid either in the case where the collision with the tree were to be shown sufficiently clarified because A has, through the wrong information about the vehicle condition, been seeking such a large unfounded compensation that it would be justified, based on such grounds alone, to refuse any compensation at all.
Customer’s complaint
A demands that the damage to his car be repaired. He demands that he be paid a € 200 daily compensation for loss of use for the days following the occurrence of damage. He also demands that all invoices following the occurrence of damage be refunded to him.
A’s policy includes a € 200 indemnity for interrupted use. After the occurrence of loss, A asked the Insurance Company to repair the damaged parts of the car and to pay the daily compensation for the repair time as per the policy. Later, the Insurance Company started to make various excuses for the car not being repairable. A reports having dismissed two offers by the Insurance company, amounting from € 1,000 to € 1,200. A finds that the Insurance Company changed the policy unilaterally in order not to have to pay A the € 200 daily compensation.
A wants to emphasise that he never asked the Insurance Company to repair the motor of his car, or to examine it. Neither did A ask the car to be salvaged or that he would be paid any amount of money for independent repair of the car.
A also complains about the car insurance invoices sent to him after the occurrence of damage, although any repairs to the car were denied. The invoices have also been forwarded to a debt collection agency, and collection charges have been imposed on A. A does not know which invoices are referred to since the policy has been terminated months ago. According to A, the communications with the Insurance Company started in English but later, the Insurance Company transferred to Finnish in their messages and decisions. A finds that the action of the Insurance Company is inappropriate.
In his statement in response to the reply by the Insurance Company, A told that he received a € 200 invoice from the towing company E Oy, related to the towing of A’s car from the C Oy premises to his home. A told E Oy that the towing invoice should be addressed to the Insurance Company because towing is covered by A’s insurance policy. According to the reply by E Oy, the Insurance Company informed them that A’s car was not insured. Strangely enough, the event still had a claims number. E Oy invited A to pay the invoice and then contact the Insurance Company. E Oy said that the Insurance Company had invited them to send the invoice to A. When A contacted the Insurance Company, they told him that the car insurance had been changed from a more comprehensive policy to a more limited one. This had taken place without A’s consent.
A demands an explanation from the Insurance Company as to his request to have his car motor repaired. A finds that the Insurance Company’s account of the events related to the handling of the towing invoice does not hold up. According to A, the collision with the tree had taken place exactly has he told in his accident report.
Reply by the Insurance Company
In their reply, the Insurance Company contests the claims of the Customer. The Company refers to the grounds presented in the earlier decision on the claim. The Company finds that it has not been demonstrated that the collision with the tree would have taken place as described by A in his accident report. The circumstances in the place of the event were not of the nature that would, as reported, make the collision with the tree due to the loss of control of the vehicle credible. According to the Insurance Company, the explanation given on the collision with the tree is further undermined by the motor trouble of the vehicle, with fraudulently incorrect information given on it in the claim for compensation. Therefore, the Claimant has not provided a reliable account of the occurrence of loss as per Section 69 of the Insurance Contracts Act. Being present at the time of the damage, A would have the opportunity to do so. The Insurance Company finds that the incompleteness of the account given cannot, under the legal practice, become detrimental to the Insurance Company.
As regards fraud, the Insurance Company refers the decision on the claim which states that A has provided the Insurance Company with fraudulent and incorrect information, as per Section 72 of the Insurance Contracts Act, regarding the vehicle condition prior to the damage; this information has had impact on the assessment of the Insurance Company liability. There is no reason to assess the liability to compensate differently because the insurance cover also includes the interruption insurance.
Claiming compensation for damage to the motor
To be able to determine eventual compensation, the Insurance Company has asked A to provide information on the condition of the vehicle, including details of any problems or damages in the vehicle prior to the occurrence of the damage. In the information provided, A stated, among other details, that the motor was in good condition which means, according to a scale in use, a better condition than usual in view of the car age and kilometres driven, as well as absence of problems requiring repair. In the information provided, A also told that there were no unrepaired problems or damage in the vehicle technical systems.
Based on the examination report of C Oy, the Insurance Company finds it demonstrated that the vehicle motor, indeed, had problems prior to the reported collision with the tree. This problem has been shown to generate a noise that A, the driver and owner of the car, must have been aware of. This awareness is also supported by the fact that earlier, or on 13 January 2020, the vehicle was towed to D Oy, picked later up without any repairs made. Since A has given wrong information for damage determination purposes about the vehicle motor condition, with an essential impact on the fair value of the vehicle, it is to be found that he has also claimed damages for the motor. Only once it became clear to A – as told by the damage loss surveyor – that the Insurance Company knows A had given wrong information about the motor condition, did he present the request about the repair of the collision damage.
Claim about compensability of collision damage
Under the policy terms, repairing is not worthwhile if the repair costs exceed 70% of the fair value of the vehicle on the date of occurrence of the damage. The repair cost of the right front damage, caused by the collision with the tree, would amount to over € 4,000 according to the repair cost estimate. Therefore, the repair of a vehicle worth € 1,200, with a motor problem, is not worthwhile according to the terms of the voluntary motor vehicle insurance. According to the said policy terms, the amount of damage is the difference between the vehicle’s fair value prior to the occurrence of the damage and its value after such damage. According to the Insurance Company, repair costs will thus not be compensated under any circumstances. They would therefore not be compensated, not even if the collision with the tree would be explained through reliable information on the course of events provided as per Section 69 of the Insurance Contracts Act and no false information on the vehicle condition would have been provided as per Section 72 of the Act.
Change in insurance cover
The Insurance Company reports that it changed the insurance cover in the middle of the insurance period as of 19 February 2021 so that it no longer included the interruption insurance with a € 200 daily compensation. The insurance cover was changed because on 19 February 2020, A changed the purpose of use of his vehicle from one subject to licence to private use.
According to the Insurance Company, the change in the insurance cover does not, however, have any importance for the dispute here examined since the Insurance Company had adjusted A’s insurance cover retroactively to contain the same as it had before the change.
Towing invoice
According to the Insurance Company, the towing invoice referred to in A’s complaint relates, as indicated by the invoice, to a towing ordered by A himself, to have the vehicle transferred on 26 October 2020 from the C Oy premises where it was examined. The vehicle was brought there due to action taken by A himself. At the time of this towage, the vehicle did not have any valid voluntary motor vehicle insurance since the policy had been terminated on 28 September 2020 due to unpayment. According to the Insurance Company, this was the reason for the email sent by the towing company reporting that the vehicle was not covered by any voluntary motor vehicle insurance. According to the insurance company, there is no illogicality in the fact that the claims number related to an earlier event is quoted in the invoice while A’s vehicle was not covered by a voluntary motor vehicle insurance at the time of the towage. To conclude, the Insurance Company notes that the compensability of the towage costs will be clarified once the dispute at hand is resolved.
Decision
Formulation of question
The Insurance Complaints Board finds that it is undisputed between the parties that the motor damage of A’s car is not compensable from the insurance based on the crash of 12 March 2020 as reported. The dispute between the parties relates to the question whether the damage to the car’s bodywork should be compensated by the insurance. The question is whether there is sufficient evidence demonstrating that the occurrence of damage justifies compensation for the damage referred to. Another question is whether A provided the Insurance Company fraudulently with incorrect information and whether the compensation should be denied on these grounds.
The applicable norms of law and policy terms
Under Section 69 of the Insurance Contracts Act (Claimant’s Duty of Disclosure), the claimant shall provide the insurer with such documentation and information as is required for assessing the insurer's liability and as the claimant can be reasonably required to provide, with due consideration of the opportunities available to the insurer to obtain such information.
Under Section 72 of the Insurance Contracts Act (Misrepresentation after occurrence of insured event), if after the occurrence of an insured event the claimant has in bad faith given the insurer incorrect or incomplete information of importance for the assessment of the insurer's liability, compensation or benefit may be reduced or refused as considered reasonable in the circumstances.
According to the terms of the Voluntary Motor Vehicle Insurance (in force as of 1 January 2019), Clause 3.1 (Collision Insurance), the collision insurance covers the material damage directly caused to the insured object
1. from running off the road or overturning
2. blow, crash, falling or other similar sudden and external reason damaging the insured object
[…]
Under Clause 5.4 (Amount of Loss), the amount of loss is the repair costs of the insured object if the repairing of the insured object is economically viable under the present policy terms.
Repairing cars, pickup vans and campers, motorbikes, light and camper trailers is not economically viable if the repair costs of the vehicle exceed 70% of the vehicle fair value on the date of the insured event.
[…]
If the repair of the vehicle is not economically viable, the amount of damage is the difference between the vehicle’s fair value prior to the occurrence of the damage and its value after such damage. […]
Under Clause 5.5.3 (Fair value) of the terms, the upper limit of the Insurance Company’s liability to compensate is the fair value of the vehicle, including the equipment constituting the insured object (see Clause 5.4).
The fair value of a vehicle is the cash price normally available for the vehicle under the market circumstances of the date of the insured event, should it be on the market in a purposeful manner. The fair value does not mean the selling price set by car dealerships, their asking price or trade-in credit but the price that several persons would, in reality, have been prepared to pay for the car.
[…]
Under Clause 5.5.5 (Paying the compensation), the Insurance Company will meet its liability to compensate
1. by paying the direct repair costs caused by the insured event, based on receipts, or by paying an estimated and agreed amount of repair costs
2. by paying the difference between the fair value of the insured object immediately prior to the accident and its fair value after the accident
3. by salvaging the insured object at its fair value
4. by salvaging the insured object at the value of the salvage benefit. The conditions for paying the compensation under the salvage benefit rule is a non-reduced compensation; or
5. by replacing the insured object with a similar or similar value vehicle or part of it. However, the Insurance Company has no obligation to replace the object with corresponding assets.
If the ownership of the insured object is not handed over to the Insurance Company, the compensation is payable in accordance with item 2 above. The deductible recorded in the insurance policy will be subtracted from the compensation.
Evaluation of the case
In its response, the Insurance Company reported that it retroactively adjusted the insurance which was valid at the time of the occurrence of the insured event with the interruption insurance element mentioned by A in force. Based on this, the Complaints Board finds that it is undisputed that the A’s insurance policy had, at the time of the reported occurrence of the damage, or on 12 March 2020, the interruption insurance with the € 200 of daily compensation; the Complaints Board does not examine the scope of the insurance at the time of the accident any further.
According to the accident report forwarded to the Complaints Board, the car driven by A (Hyundai I40 1,7CRDI 100 A Comfort, 299,161 km driven, first year of service 2013), slid against a tree during the turn to a parking area. In the accident report form, A marked that the damaged spots were the right front corner and side as well as the right rear corner. According to the accident report, the road surface was snowy or icy during the accident.
The examination report by C Oy of 20 July 2020 shows that in the tests made, A’s car started and run normally but the motor made a strong rattling noise which increased as the motor speed was higher with more gas given. According to C Oy’s opinion, the noise could be distinguished from the normal motor running sound at the driver seat, even when the doors and windows were closed. The motor oil was found to be black and its fluidity was almost that of water. Metal particles were detected in the oil.
In the conclusions of C Oy’s opinion, it was pointed out that there were bearing damages at least in the connecting rod of one cylinder of the motor. The more precise reason for the bearing damage could not be investigated without stripping down the motor. The rattling noise was loud also in idle running, suggesting that the damage had progressed and had existed for a longer period of time, at least for tens or even some hundreds of kilometres. When the car was, nevertheless, driven, the shackle of the connecting rod either seized up or broke causing an unrepairable damage to the motor. The observations suggested that the crankshaft journal and the bearing housing of the connecting rod were worn in the spot of the damaged bearing, to the extent that the current crankshaft would no longer be used in the repairs but the whole motor would have to be replaced to repair the problem.
In the opinion about the fair value of 27 August 2020, C Oy estimated that the fair value of A’s vehicle was no more than € 1,200. The estimate considered the old, unrepaired crash damage at the rear corner of the car as well as the bearing damage in the connecting rod of one cylinder, requiring a motor overhaul. Had the vehicle been in perfect condition, its fair value could be set, according to the opinion, at € 5,700.
The Complaints Board finds that the damages of the right corner of the vehicle are, as such, compatible with the collision with the tree as described by A in his accident report. According to C Oy’s opinion, however, the damages in the car’s rear corner were old. Moreover, according to the information presented by the Insurance Company, the temperature throughout the accident day at the close-by weather stations was over zero. The Insurance Company has also referred to the photos taken at the place of the accident, according to which the road from the entrance of the parking area to the area itself is direct, with trees at fairly long intervals in the lawn to the right of the road. The Insurance Company finds that based on this information, the occurrence of the crash as described by A has not been proven. The Insurance Company has also referred to the information provided by A on 8 April 2020 regarding the vehicle for compensation determination purposes. The Insurance Company finds that A has given fraudulently incorrect information in reporting that the condition of the vehicle prior to the damage was good in all respect and that its technical system, equipment or structures did not have any shortcoming or unrepaired problems or damages although the right rear corner of the vehicle, in actual fact, had an unrepaired crash damage and the motor of the vehicle had a problem apparent in terms of a deviating running noise – the reason for which A’s car had been towed to the garage already about two months prior to the occurrence of the damage, as the information by the Insurance Company shows.
The Complaints Board finds that in the case at hand, the information of the damages and problems in A’s car show that the repair costs were clearly higher than the car’s fair value. Based on this, the compensation in line with the policy terms is, according to Clauses 5.5.3 and 5.5.5, as a premise, either the salvage value of the car at its fair value or paying the difference between the car’s pre-accident fair value and its residual value.
In the case at hand, the A’s account of how the accident took place is scarce. A has not given any account of the reasons why he reported that also the right rear corner of his car was damaged in the occurrence of the accident. However, A has said he never intended to claim damages for the car motor. He only presented the Insurance Company with the two repair offers he had for his car. As concern these offers, or the exchange of messages related to claims handing which A describes in his complaint saying that they were at least in the early stages of claims handing in English, the Insurance Company has provided no information to the Board. As concerns the form related to the vehicle condition, used by A, he has, as such, ticked a box suggesting his car was in good condition prior to the occurrence of the accident, and he has also ticked the box to suggest that there were no unrepaired problems or damages in the vehicle. However, A has written in the form under “Which shortcomings and/or problems/damages?” the response “I do not know”. In addition, A’s response to the question “Was the vehicle in a condition and had features to be accepted in the periodic inspection”, A had written “I do not know” in the form. The form forwarded to the Board is, as concern the markings, drafted by C Oy, instead of the Insurance Company.
According to its Rules of Procedure, Clause 10, the Insurance Complaints Board in entitled not to examine a dispute in cases where reliable solution of the dispute would call for receiving oral evidence or where the dispute is of a nature that its examination would seriously hinder the Board’s efficient operations.
The Insurance Complaints Board finds that the information on the occurrence of the collision accident is scarce and party conflicting. Even if the collision of a vehicle against a tree is, in the Board’s opinion, fully plausible in a parking area as discussed in the case at hand, A has not provided any explanation, apart from the sliding of the vehicle, of the events that led to the collision described in the accident report. The account of the sliding of the vehicle due to icy or snowy road surface is partly conflicting with the weather data presented by the Insurance Company even though it is known that, in springtime, roads may occasionally be icy when the temperature goes momentarily down to 0 ˚C. A has criticised the fact that the Insurance Company has switched to Finnish after first communicating with A in English. However, he has not expressly said that he would not have understood the questions about the vehicle condition, for example, due to lacking language skills. The Insurance Company, for its part, has not contested A’s account of the earlier claims handing or the compensation offers given to A.
In the case at hand, the negative claims settlement of the Insurance Company was based on one hand, on the insufficient evidence on the occurrence of the damage and, on the other hand, on A providing the Insurance Company fraudulently with incorrect information about the condition of his car. In the dispute at hand, the central information from evaluation point of view is, besides the account about the occurrence of the damage, also the contents of the information provided by A to the Insurance Company in the course of the claims process, as well as the way in which A has been asked to provide information about the vehicles previous problems and damages, and in which connection and by whom this was done. The Insurance Company has not provided the Board with any information about the discussions A refers to, probably had with a loss surveyor or a claims handler. Based on the information provided to the Board, it remains unclear whether the filling of the form containing data on the vehicle conditions was asked from A by the Insurance Company or by C Oy. Although A has ticked the boxes “good” in the three-level scale of the vehicle condition, thus meaning the best condition, the hand-written markings made by A in the form can be seen as reservations related to such ticked choices. Moreover, the Board has not received the information about the termination of the voluntary motor vehicle insurance due to non-payment, as described by the Insurance Company. The Board finds that because the information on the above aspects is totally absent, the reliable evaluation in the written procedure by the Insurance Complaints Board is not possible.
Based on the material at its disposal, the Insurance Complaints Board is not able to clarify reliably the course of events related to the occurrence of the accident and the related claims handling. Therefore, the Insurance Complaints Board decides not to issue a recommended solution in the case.
Final outcome
The Insurance Complaints Board does not issue a recommended solution in the case.
The Insurance Complaints Board’s decision is unanimous.
INSURANCE COMPLAINTS BOARD
Chairman Bygglin
Secretary Siirala
Members:
Maso
Vaitomaa
Vyyryläinen
Yrttiaho