Account of the case
On Thursday 15 July 2021, the Customer filed a notification of loss regarding the damage to his car, caused between Monday and Wednesday in a parking lot. In a SMS sent to the Customer, the Insurance Company informed him that they would indemnify the damage based on the collision insurance included in his voluntary motor vehicle insurance policy. The SMS also included information on the deductible of the policy as well as the contact details of the repair shop.
In the report dated 19 October 2021, the Investigator notes that in claims handling, it was found that the car had the same visible damages which were also quoted in the sales advert of 2018. According to the report, the Customer tells he had noted all damages on 14 July 2021 and that the car had suffered a collision by another car. According to the Customer, the car’s right side was not damaged when he bought the car. The Insurance Investigator reports having examined the damage together with the Loss Surveyor who had pointed out that the right front door and the side trim in the middle of the door showed attempts of painting. The two scratches in the rear door side trim were identical to those shown in the sales photo. The side trim in the right front door had been glued, and it was about 0.5–1 cm lower than the trim in the rear door. The door also had a dent. These damages are clearly old. The right-side front fender shows a dent which cannot have originated as a result of an impact caused by a car. The dent has no such scratches which are caused by an impact of another car. The form of the dent does not match damages caused by crashes/collisions. This dent has been caused either by sitting with force against the car, or by hitting it with something/kicking.
According to the registrations in the Insurance Investigator report on a telephone conversation of 19 October 2021, the Customer had asked him to consider that he had bought a car in an intact condition and he had noticed these damages only when he filed the notification of loss. In particular, this applies to the long scratch in the right front door. Finally, the Insurance Investigator reported having contacted the previous owner of the car who, at first, did not properly remember whether the car had damages to the right side when it was sold, but after seeing the sales photos, the previous owner admitted that there might have been some minor damages.
Based on the data in the claims register, the Insurance Company made queries with two earlier insurance companies regarding two road accidents reported in 2018 and 2020. In the reply provided by the earlier Insurance Company, they did not have photos of the damages to the car itself, but according to the notifications of loss, the other car’s left front corner was damaged, while in the other case, it was the rear of the other car.
In its decision on the claim of 22 October 2021, this Insurance Company declared that it would not pay compensation for the damages. It is mentioned in the decision that the Customer had notified deep scratches suffered by the car’s right front door, stretching up to the headlight while the right side of the car would also show some denting. The Inspectors of this Insurance Company reported having compared the car sales photos of 2018 and confirmed that the damages to both doors are visible in the photos in question. The Company also refers to the telephone conversation between its Insurance Inspector and the Customer during which the Customer had said that he had noticed all damages on 14 July 2021, saying that the car’s right side was intact when he bought the car.
Moreover, it is noted in the decision that there are signs of efforts to paint the right front door and the side trim in the middle of the door, and that the scratches to the rear door trim are identical to those in the sales photo. Furthermore, it is pointed out that the side trim in the right front door had been glued, and that it was lower than the trim in the rear door. The Company finds that the dent in the right front fender cannot be caused by an impact by another car because there are no scratches caused by such a collision. The Company finds that the damage is caused either by a forceful sitting against the vehicle or by hitting it with something or by kicking. As regards the discussion of 19 October 2021 between the Insurance Investigator and the Customer, the Customer would, at that point, have told that he had bought the car intact, and had only noticed the damage, the long scratch in the front door, in particular, when he had filed the notification of loss. According to the statement by the Loss Surveyor, nothing in the damage in the vehicle seems to indicate a typical damage from a crash, and the damage had been visible already prior to the insurance period, with the exception of the dent in the front fender. As regards this damage, however, there is no proof that this damage would have originated after the Insurance Policy was bought on 29 June 2021. The Insurance Company found that the Customer provided them with fraudulent information about the damage to the vehicle, and therefore the damages were not indemnified based on the insurance.
Through its letter of 4 November 2021, the Insurance Company terminated the policy, effective 10 December 2021. The grounds for the termination were the fraudulent and wrong information given to the Insurance Company after the occurrence of the insured event.
In his complaint of 11 November 2021, addressed to the Insurance Company’s internal appeal procedure, the Customer says that in all of his discussions with the Insurance Company representatives, including the Insurance Investigator, he had reported that the damages suffered by the vehicle, including the dent in the right front fender and the long scratch to the right front door. He also says he had mentioned these precise damages when he had gone to show, as instructed by the Insurance Company, to a repair shop that works as a partner of the Company. The Customer say that, indeed, there were other damages to the car, but he is not requesting compensation for them because he had no insurance with the Company in question when these damages were caused. As to the reason of the damage, he has used the expression “most likely” when he had told that the damage could have been caused when another car was parked next to his. He denies mentioning a crash or a collision. He says the damage may also have been caused by vandalism but he finds that the decisive aspect is that such damage has been caused, not what has caused them.
The Customer tells that during his latter discussion with the Insurance Investigator, the Investigator mentioned that the car’s earlier owner had been asked about these damages, and the previous owner had said that there were no such damages in the car at the time it was sold, but nevertheless, the Insurer’s decision on the claim includes a mention that the car had these damages already in 2018. The Customer also requests that the Company clarifies the reasons for finding that the Customer has given wrong and fraudulent information. The Customer thinks it may be possible that this is a question of lacking language skills, resulting in a misunderstanding when the notification of loss was received. The Customer has attached photos to his complaint to shed more light to the damages for which he seeks indemnification. In addition to the dent in the front fender and the long scratch, the Customer notes that he is not sure about the scratches under the handle in the right front door.
After the case was taken up by the Insurance Complaints Board, the examination in the Insurance Company’s internal appeal procedure was suspended.
Customer’s complaint
The Customer highlights the same grounds presented in the complaint to Company’s internal appeal procedure, underlining that he has filed for compensation for two damages, the dent in the right front fender and the long scratch in the right front door. The Customer admits there are also other damages to the car but he has not requested compensation for them and so they do not have any bearing on the case at hand. He also denies providing wrong information in bath faith to the Insurance Company in relation to the occurrence of the insured event.
In his additional writ, the Customer says he had phoned the earlier owner who, in turn, confirmed that the car did not have any damage at the time it was bought. According to the Customer, the previous owner would have said this was also told to the Insurance Investigator. The Customer also appended a photo where he had indicated the damage for which he seeks compensation.
Reply by the Insurance Company
In its reply, the Insurance Company repeats the details of the insured event and the various steps of claims handing. The Company refers to what has been said in the decision on the claim, adding that the sales photos of the vehicle of 2018 show damage in the right side and doors and the seller of the vehicle had, indeed, admitted that the vehicle had damages in the mentioned places. The Customer had told the Insurance Inspector that he had noticed all damages to the car only on 14 July 2021. The photos taken by the repair shop show, according to the Company, damages originating in apparently different situations, with clearly visible old damages. Furthermore, the Company points out that the occurrence of damage event described by the Customer in his notification of loss – or collision by another vehicle – cannot have caused the damages for which compensation is sought.
The Company finds that the vehicle has been subject to several occurrences of damages prior to its purchase as well as from the purchase day to 14 July, with respective signs left on the vehicle. The Customer has not filed any police report regarding the damages, as required by the General Terms and Conditions. For these reasons, the Company finds that the notified occurrence of damage event remains so unclear that there are no conditions to pay the compensation. Moreover, the Company finds that the Customer has given untruthful information on the condition of the vehicle prior to the notified occurrence of the damage, and on this basis the Company has been entitled to terminate the voluntary car Insurance Policy to end under Chapter 3 Section 15 Para 5).
Recommended solution
Formulation of question
This case focuses on the question whether the Customer has demonstrated that the damages, for which he claims compensation, were caused during the period of validity of the insurance policy, and whether he can be found to have in bad faith provided the Insurance Company with wrong information about the insured event. In addition, the question is about the legal validity of the decision on the claim, made by the Insurance Company
Applicable insurance terms
Under the terms of the voluntary motor vehicle insurance, valid as of 1 April 2021, Para 4.3 (security against vandalism/malicious damage), this security covers the damage caused to the insured object due to malicious damage, the place and date of which can be defined accurately. Malicious damage refers to the damage caused to the insured object with explicit intent to cause damage. As regards the limitation of the security against malicious damage (4.3.2), the security does not cover damage caused by another vehicle.
Under Para 4.4 (collision security), this form of security covers losses directly caused to the insured object due to reasons such as collision or other sudden and unpredictable external cause damaging the insured object.
Under Para 10.1 of the General Terms and Conditions (Obligations of the Claimant), the party claiming compensation must inform the Insurance Company without delay about the occurrence of the damage event. Any crime must be reported to the Police authorities of the scene of the crime, without delay.
The Claimant must provide the Insurance Company with documents and information needed to establish the liabilities of the Insurance Company. Such documents and information include, for example, those that allow to establish whether the insured event has taken place, how large the damage caused is and who is the party to be compensated, who drove the vehicle and whether alcohol or other intoxicants were involved in the occurrence of the insured event.
The Claimant must provide the documents and clarifications and send them to the Insurance Company, at his own expense, unless otherwise agreed. The Claimant must keep the documents and information for at least six months after filing the claim and send them to the Insurance Company upon request.
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The Insurance Company must be reserved the possibility, prior to the repairs, to inspect the damaged property to establish the cause of the damage and to find whether it is a damage compensable from the insurance policy. If the repairs have been started without the Insurance Company reserved the opportunity to inspect, the repairs must be documented, for example by photographing and keeping the damaged parts. The damaged object must not be disposed of without special reason.
The Insurance Company is not liable to pay the compensation until it has received the above clarifications.
If after the occurrence of an insured event the Claimant has in bad faith given the insurer incorrect or incomplete information, with importance for the assessment of the insurer's liability, compensation or benefit may be reduced or refused as considered reasonable in the circumstances.
During claims handing, the damages notified to various insurance companies can be checked, using the insurance companies’ joint P&C information system.
Evaluation of the case
On 15 July 2021, the Customer notified the Insurance Company about damages he had noticed the day before saying that they were caused between 12 and 14 July 2021 on a public parking lot. First, the Insurance Company told they will indemnify the damages from the collision security but later the Company made a negative claims decision based on the fraudulent and wrong information provided by the Customer and on the fact that the damages were not shown to have taken place during the period of validity of the motor vehicle insurance policy, in force as of 29 June 2021. The Insurance Company also terminated the motor vehicle Insurance Policy in the middle of the insurance period. The Customer denied having provided wrong information and told he has only claimed compensation for the two damages notified, with no exact information on how they were caused.
According to current law, the burden of proof for a compensable insurance event lies with the policyholder making the claim. In turn, the Insurance Company has the burden of proof for aspects that it pleads to release itself from the liability to compensate, here particularly the alleged fraudulent and wrong information provided by the Policyholder.
The Insurance Complaints Board finds that the Customer has many times said he was seeking compensation for the dent in the front fender as well as for the long scratch in the right front door. However, in the complaint address in the internal appeal procedure of the Insurance Company as well as in the additional writ sent to the Board, the Customer also mentions the scratches in the right front door under the handle. The scratches are also marked in the photographic appendix to the Customer’s latest letter. For this reason, the Board interprets that the complaint relates not only to the dent in the fender and the long scratch in the side trim of the right front door, but also the scratches above the trim.
In the established decision practice of the Insurance Complaints Board, it has been found that a positive claims settlement issued by the Insurance Company under valid law and good insurance practice is, as a premise, legally binding to the Insurance Company. However, the premise of the legal validity of the claims settlement decision can be overturned, for example, based on the provisions of the Insurance Contracts Act, the invalidity or equitability grounds under the Legal Transactions Act or potential new information obtained in the case after the decision was made.
In the case at hand, the Insurance Company has expressly informed the Customer, after receiving the notification of damages, that it will compensate the Customer’s damages based on the collision security. The Complaints Board finds that the Insurance Company has made this whilst aware of the fact that the Insurance Policy had been, at the time of the notification of the damage, in force for about two weeks and that – considering the report on the circumstances of the damage event described – the Customer probably did not have exact information on the cause of the notified damages.
The Insurance Complaints Board finds that the information provided by the Insurance Company shows that the vehicle had damages that had originated in different times. In the letters to the Company or the Insurance Complaints Board, the Customer does not deny the existence of the other damages but, on the contrary, admits there were other damages but points out that he was not claiming indemnity for them. Correspondingly, the Customer repeatedly and consistently says he was seeking compensation only for the above mentioned damages on the right side. The Complaints Board finds that the Insurance Company has not provided detailed information on the contents of its discussions with the Customer in the form of recorded phone conversations or transcribed discussions, and therefore the Board finds possible that the discussions in English, and the recordings thereof, may include potential misunderstanding and unclarities as suggested by the Customer.
As concerns the description of the damages, recorded in the notification of the damage, or collision by another vehicle, the Complaints Board finds it to be habitual that in parking lot accidents the customers do not have exact information on the course of the events and that the information provided is based on conclusions made on the basis of the damages and marks. The Complaints Board also points out, that the writs of the Parties include partly conflictual mentions of the previous owner’s statements but neither Party does not provide, for example, a written and signed statement of the earlier owner on the condition of the vehicle at the time of its sale. As concerns the photos provided by the Insurance Company, the Complaints Board finds that they do not clearly and undeniably show that the scratches above the trim were on the vehicle prior to the beginning of the insurance period. As relates to the dent in the fender, this is not what the Company maintained, either. Instead, it found that the Customer has not shown that the damage was caused during the period of validity of the insurance.
Taking the above aspects of the burden of proof into consideration and in the overall estimation of the case, the Complaints Board finds that it has not been demonstrated that the Customer would have given, in bad faith, wrong information on the damages to the vehicle while filing the notification of damages, or later during claims handling. Therefore, the Insurance Company has no grounds to amend its earlier positive decision on the claim.
As regards the trim in the side of the door, the Complaints Board finds, based on the photos provided by the Parties, that the trim has several scratches and other marks. Looking at the photos, the Complaints Board finds that it remains unclear whether one or several of the scratches originated during the validity of the insurance policy. The Complaints Board also finds that even if this was the case, it has not caused any additional damage, considering the existing need for repairs in the trim.
Final outcome
The Insurance Complaints Board recommends that the Insurance Company compensate for the repair costs of the dent in the fender and the scratches in the door below the handle as per the policy Terms and Conditions, taking the insurance deductible into consideration only once.
The Insurance Complaints Board’s decision was unanimous.
INSURANCE COMPLAINTS BOARD
Chairperson Bygglin
Secretary Korpelainen
Members:
Kankkunen
Vaitomaa
Vuori
Vyyryläinen