Insurer offers $28k settlement over pricey jewellery claim with no proof of ownership

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A woman who tried to claim almost $60,000 from her insurer for jewellery for which she had no proof of ownership has had to settle for a payout of half that amount.

The woman lodged her claim for stolen jewellery with her insurance company and commissioned a post-loss report that valued it at $56,887.

But the only proof of ownership she had was a photo of herself wearing it at a party.

Insurance and Financial Services Ombudsman (IFSO) Karen Stevens’ office looked into the case. 

Stevens said, in all claims, the onus would rest on the insured person to prove they had suffered a loss that was covered by the policy, and the value of the loss.

“With valuable jewellery, an insurer will often require purchase receipts, or a recent valuation, to establish proof of ownership and the value of the loss. Because [the woman] hadn’t provided sufficient proof of ownership or value, the insurer had the discretion to decide,” Stevens said.

In the end she was offered $27,846 to settle the claim.

Stevens said she often heard from people who were unhappy to discover that it was up to them to prove evidence for their insurer – this is called establishing a prima facie claim.

She said, with jewellery, an insurer would often want receipts, or a recent valuation.

But because, in this case, the client had not provided enough proof of her ownership of the jewellery, or what it was worth, the insurer was allowed the discretion to decide what to do with the claim.

In another case, a man phoned his insurer to report his car had gone missing from his house.

He said he noticed the keys were missing from the kitchen table and phoned the police.

Later in the day, he called again to say police had found his car down a bank not far from his house. He wanted to claim for the damage.

The insurer did not believe his claim and said he had pushed the car down the bank, hoping it would not be found in 10 days, so that it would trigger a full agreed-value payout of $30,000.

Rather than alleging outright fraud, the insurer said he had not established a prima facie claim and cancelled the policy. The man complained to Stevens’ office.

Stevens said, in order to prove the prima facie claim, he would have had to show the damage was accidental.

“The insurer relied on a body of circumstantial evidence to decline the claim and support its conclusion that [he] had pushed the car down the bank,” she said.

“However, the IFSO Scheme case manager said there was no direct evidence to support a finding that he pushed the car down the bank. The insurer hadn’t assessed the vehicle or its value.”

Because the insurer had not provided enough evidence to support its allegation, Stevens’ case manager said it was not entitled to decline the claim.

But the car owner was told it was up to him to prove the damage was caused by the car going down the bank.

 After the complaint, the insurer assessed the car, which showed substantial mechanical damage.  The insurer asked the owner to show the mechanical damage was caused by the accident. He couldn’t prove this, so the insurer only paid for the panel damage, which he could demonstrate was caused by the accident.