Facts
Decision
Fraudulent insurance claims create serious and costly problems for European insurance companies. However, efforts by insurers to fight fraudulent claims occasionally go too far. This was the consensus in a judgment handed down by the Svea Court of Appeal, which held that statistical improbability of a car theft was not, per se, sufficient to rebut a claim under a motor policy.
Facts
The owner of a 2004 Volvo V70 notified the police and his insurance company that it had been stolen in October 2004. The car was equipped with an immobiliser – an electronic antitheft device. The owner retained the two original car keys in his possession after the theft. The car was never found.
The car was insured under a motor insurance policy that included protection against theft. It was understood that the value of the car was Skr175,000. According to the owner and an accompanying friend, the car was parked at around 8:30pm in a parking space close to a commuter station and close to European Highway E6. There were no other cars parked in the vicinity. When they returned at around 10:00pm, they discovered that the car was gone.
The insurer disputed the car owner's entitlement to insurance indemnity on the grounds that the car may not necessarily have been stolen and that, accordingly, no loss had occurred that fell within the scope of the insurance policy. The insurer implied that this was a case of motor insurance fraud.
Studies performed by nationwide alarm and rescue enterprise Larmtjänst AB showed that 90% to 92% of all vehicles that are stolen in Sweden are recovered within 10 days. The remaining 8% to 10% include vehicles that are stolen for export as part of organised theft operations (normally expensive and/or exclusive cars) or cases of insurance fraud. The car stolen in this case was neither expensive nor exclusive. According to available statistics from Larmtjänst, only two cars of the same mark and model and equipped with the same type of immobiliser were stolen and never recovered in the region during the period of its studies.
In 2004 Larmtjänst undertook an extensive theft protection project which investigated the percentage of stolen cars equipped with modern theft protection devices that had been stolen either with a key or by manipulation of the theft protection device. The results showed that almost all of the cars that were found had been accessed with the car's original keys. In this case the car was locked and its alarm was activated. No car keys were missing after the alleged theft. The immobiliser prevented the car from being started without its own keys.
The insurer further argued that the notion that the car may have been transported away from its parking place was improbable because this required prior planning which was not possible due to the fact that the car was not repeatedly parked in the area. Further, towing, hoisting or transporting the car would have entailed a significant risk of detection.
Decision
Under Swedish law, insurers can defend a claim by burdening the claimant (the insured) with proof of loss and then challenging that proof rather than alleging fraud, which is difficult – if not impossible – to prove. Accordingly, when an insurance company disputes an insured's entitlement to insurance indemnity, the insured has the onus of proving the circumstances of the loss to establish that the loss falls within the scope of the insurance policy. The level of proof required is satisfied if, on an overall assessment of all circumstances, it is more probable than not that the loss falls within the scope of the insurance policy.
The owner and his friend confirmed that the car was parked in the parking space at the relevant time and that it was no longer there when they returned. Moreover, the car was equipped with an immobiliser and all car keys were held in the owner's possession. Therefore, a theft had been possible either by an on-site exchange of the immobiliser components or by the car being towed away from the site. The court agreed with the insurance company that it was not probable that the components were exchanged. Such an operation takes time, advanced technique and in-depth knowledge as to how the system operates.
The court disagreed with the insurance company on the possibility of the car being towed. Considering the fact that the parking space was located close to the E6, extensive planning did not seem necessary if the car was stolen using a truck to hoist and transport it. For persons with access to such a vehicle, it would have been possible to search for suitable vehicles to steal without planning exactly which car to take from a specific location. The court did not share the view that it was improbable. On the contrary, the court found it not improbable that someone had been 'cruising' with a breakdown truck and chose to steal the car. In addition, the court took the view that the risk of detection was low if the car was towed away from an empty parking area. Plus, towing away a car is not usually an indication of theft.
The court emphasised that the statistics presented by the insurance company meant that the mere fact that a car is equipped with an immobiliser and is not found shows that it is more probable that an insurance fraud has been committed than the car has been stolen. However, lacking a clear exclusion to that effect in the policy conditions, a claim could not be denied solely by reference to the statistics and these two circumstances. Hence, the car owner was considered to have proven that it was more probable than not that the car had been stolen, and he was awarded the claimed amount.
For further information on this topic please contact Rose-Marie Lundström at A1 Advokater by telephone (+46 8 545 811 03), fax (+46 722 36 39 03) or email ([email protected]).