Antonio Sgro alleged that his Ferrari 360 Modena, which was insured with AAMI for an agreed value of $190,350, was stolen from a suburban Sydney street, a short distance from his home, during a five hour window of opportunity in 2011.

AAMI investigated Sgro’s claim and refused it on the basis that it was fraudulent. Sgro commenced proceedings in the District Court and thereafter in the Court of Appeal. He was unsuccessful on both occasions and the courts held that AAMI were entitled to refuse his claim.

The case highlights some important issues for insurers dealing with fraud cases:

Even where a defence of fraud fails, an insured still bears the primary and initial onus of establishing their claim is covered under the policy. This onus will not be discharged where the likelihood that the insured event alleged by the insured to have occurred is equal to the likelihood that no insured event occurred.
An insurer does not bear the onus of disproving the claim of an insured in the first instance.
An insurer does not have to establish that another version of events is more likely than the version of events alleged by the insured. A court will not, or at least should not, give a plaintiff “the benefit of the doubt” if the evidence does not establish that their version of events is more probable than not.
Dishonesty alone will not suffice to make out a defence of fraud under section 56 of the Insurance Contracts Act 1984 (Cth) without clear evidence that the conduct was engaged in for the purpose of obtaining a benefit from the insurer.
Allegations of fraud can be hard to establish on an evidentiary basis and financial motive is only one factor in establishing fraud. The intention of the insured to create a false belief in order to obtain a benefit remains a crucial element which must also be established by insurers.

*** Read the original article here ***

*** Read the decision of the court of appeal here ***