Criminal convictions can catch you out

Daisy, with the help of a broker, arranged insurance for herself and her daughter to drive a work vehicle. Daisy was aware that her daughter, Poppy, had a couple of issues in the past and wrote on the insurance application form that Poppy:

  • had been involved in a car accident two years earlier and
  • had a drunk in charge of a motor vehicle conviction about six years before that.

Daisy also answered “yes” to the question: “Ever had a Drivers Licence endorsed, suspended or cancelled?” But answered “no” to the question: “Ever been convicted of a motoring offence?”

In addition, Poppy had been arrested while overseas with a small quantity of drugs in her possession. Daisy told the broker about the drug conviction but the broker said not to worry about it. The broker did not ask any questions about the issues disclosed on the application form, and neither did the insurer.

About two years later, Poppy was involved in an accident, took the car to a panel beater, had the car repaired and did not mention it to Daisy. A couple of months after that, Poppy was involved in another accident. This time the panel beater called Daisy and Daisy agreed to pay the $400 excess and picked up the car.

The broker then called Daisy and said the insurer had found out that Poppy had five convictions, including:

  • excess breath alcohol in 2009
  • excess breath alcohol in 2010
  • driving while licence suspended and careless driving causing injury in 2015
  • careless or inconsiderate vehicle operation in 2015.

The broker said that if Daisy had disclosed this information, the insurer would have applied a $4,000 excess and increased her premium. Daisy asked the broker to put this in writing and waited for the letter to arrive.

Some months later, Daisy was visited by a debt collection agent, wanting payment of $7,200, being the two $4,000 excesses for each insurance claim, less the $400 excess already paid to have the car released.

Daisy was shocked. She did not know anything about the first accident. Daisy felt her broker should have asked more questions when she first applied for the insurance. Unhappy with the broker’s advice, Daisy asked the broker to contribute to the excess she was now having to pay. The broker initially offered $2,100, because he had failed to advise Daisy to disclose Poppy’s overseas drug conviction, but later withdrew the offer. Daisy referred the complaint to FSCL.



The broker felt his position was clear. Daisy had failed to disclose Poppy’s convictions and it was her fault the insurer had increased the excess.

Daisy acknowledged that Poppy’s criminal record was more extensive than she had been led to believe, but said that if the broker had asked more questions about the information, she would have gone to Poppy and asked for further details. Daisy felt the broker’s dismissal of the overseas criminal conviction, which the broker agreed he had dismissed, indicated that Poppy’s conviction history was not as important as the insurer clearly considered it to be.



We discussed the complaint with Daisy, and she agreed that she should have asked Poppy for more detail and answered ‘yes’ to the question about a conviction for a motoring offence. However, Daisy felt the broker should also contribute to the loss. Daisy said that if she had known the excess was going to be so high, it might have influenced her decision about allowing Poppy to drive the vehicle.

We then contacted the broker and asked whether he would be prepared to consider an early resolution to the complaint. We acknowledged that we were not yet in a position to issue a decision on the rights and wrongs of the situation, and that non-disclosure of criminal convictions is a serious matter, but asked whether, as a matter of expediency, he would be prepared to put an offer on the table.



The broker offered, and Daisy accepted, $1,200 in resolution of her complaint.


Insights for consumers and participants

Full disclosure of your entire criminal history is critical when applying for insurance. If you are unsure about what to disclose ask your broker. Similarly, brokers should look closely at any insurance application, and if they see a statement that might be an underestimate of the true situation, it is wise to ask more questions.