A ‘Claytons’ Insurance Policy

Claytons Drink – advertisement www.youtube.com/watch?v=ylH43Tcaj60

Many of you will remember the old advertisement which stated Claytons is the drink you have when you’re not having a drink.

It would appear that some of the motor vehicle hire insurance contracts are the insurance contract you think you have when you don’t have any at all.

This sort of thing certainly goes against the ‘Make Insurance Great Again’ Campaign I am working on

This statement is based on the following blog question:

Hi Allan,
I’ve considered writing to you many times however I’m conscious of how busy you are and the many requests for help and advice you must receive every day.
However I have a scenario which I feel is a complete injustice against the little guy and would greatly appreciate your thoughts. The brief version is as follows:
• An Employee (who we do not arrange any insurance policies for, who we’ll call Jo) of one of my business clients was involved in an accident in Nov 2016 with another driver who was in a Thrifty rental vehicle. The Thrifty driver failed to give way and hit Jo.
• Jo’s vehicle has suffered appx $10k damage
• The Thrifty driver paid an additional fee to reduce the excess under his rental agreement
• Jo has no insurance on his vehicle, so he directed his claim directly to Thrifty
• Thrifty advised Jo that due to the fact their rental driver was in breach of the terms of the rental agreement ie. he breached a road rule by failing to give way, that they will not accept Jo’s claim for damage to his vehicle and that he should peruse the third party directly !
• I drafted a brief email for Jo to onforward to Thrifty in reply however they still rejected his request to lodge a claim with their insurer or to compensate Jo for his loss
• Jo then sought help from Express Legal who apparently received a similar reply although jo is dubious as to hard they pushed the matter !
• Thrifty have an insurance policy in place which I imagine they will be claiming on for the damage to their vehicle, so what am I missing here, how can an innocent party be “hung out to dry” in this case ?

Any assistance / feedback would be welcome.
Many thanks & Regards [name and email withheld]


The first thing I did was to download the terms and conditions of Hire from Thrify Rental and I found the following clause:

“You must obey all relevant road rules. If you don’t, we may require you to pay the full cost of any damage.”


I find such a clause unconscionable when someone has paid an extra charge to obtain comprehensive motor insurance.


This is not something I can solve and therefore wrote the following reply:

I think the best thing to do is to take this to ASIC.

I do see in their terms and conditions that “You must obey all relevant road rules. If you don’t, we may require you to pay the full cost of any damage.”

Having said this, if you pay an extra for insurance you would expect it to be there if you need to claim off of it.

Even at $10 a day, and I suspect the extra is more than this, the annual premium is quite high and so valid claims should be met.

I really think ASIC is the best way as I say.



5 responses to “A ‘Claytons’ Insurance Policy”

  1. Georgie says:

    I’m confused by this. The insurance is there, with third party liability, and its the policyholder (Thrifty) who is refusing to lodge the claim. If Jo had insurance, how would his insurance company be going about it? I would imagine they would be issuing a letter of demand to Thrifty to pass onto their insurer. The demand is to the owner of the vehicle, which is Thrifty, I don’t see how their contract can override the insurance contract. Jo is a third party and was not the one who signed the Thrifty hire contract, so shouldn’t he get his damages paid by Thrifty’s insurer, and then it is up to Thrifty or the insurer to recover from the customer for breach of contract? Don’t get me wrong, I believe Thrifty’s contract is unconscionable too, but isn’t that a fight for the customer and Thrifty to have, not for Jo and Thrifty to have?

  2. Karl Tester says:

    I believe that the issue at the heart of this has nothing to do with the insurance cover arranged by Thrifty. That insurance will be extremely broad and would have no such exclusion relating to the failure to obey road rules. The issue here is contractual and I suppose it has been drafted this way because (1) There is a large excess payable under the insurance cover arranged by Thrifty with their insurer so Thrifty don’t want to be up for any out of pocket expenses or (2) It allows Thrifty to protect their claims experience history.

    By inserting a clause “You must obey all relevant road rules” it gives Thrifty the scope to stop claims going through to their insurance policy which would otherwise be indemnifiable.

    As I understand it the additional daily fee paid by the Hirer to reduce the excess is actually not insurance at all but is an arrangement between the Hirer and Thrifty whereby Thrifty agree to lower the excess that the hirer pays (under the insurance that is already in place) to some lower amount.

    In any case the problem here is a contractual one in relation to the terms on the hire agreement, the insurance policy behind Thrifty would doubtless respond to this loss if Thrifty would let it through.

  3. Alex Damon says:

    Hopefully you’ll be tackling Funeral Insurance and Pet Insurance as well, Allan, as they fall into the (almost) non-insurance bracket.

  4. Renee says:

    If the hirer has breached the terms and conditions of the rental agreement the Insurer can deny liability to the Third Party on that basis however this seems extreme considering most accidents occur because someone didn’t obey the road rules. I presume Thrifty’s Insurer have a copy of their rental agreement and are aware of that clause. One way to keep the portfolio profitable.

  5. Stuart says:

    This is my take…
    The circumstances of this event arise where there has been a breach of duty of care.
    The Thrifty contract may exclude what it excludes as part of its hire contract, however that is a privity issue between it and its customer, the at fault driver. The Thrifty insurer cannot rely upon such a condition subject to the section 2 or liability section of the Thrifty policy that indemnifies Thrifty or the at fault driver of the Thrifty hired vehicle, by reason of Section 20 Insurance Contracts Act 1984 (ICAct).
    Accordingly, turning to the issue at hand Jo needs to get his vehicle quoted for repair or have it repaired no better or less (yes indemnity principle) than it was prior to the loss. On proper production of proof of loss and a demand served upon Thrifty where it is now an agreed fact that the at fault hirer was indeed at fault given the concession “Thrifty advised Jo that due to the fact their rental driver was in breach of the terms of the rental agreement ie. he breached a road rule by failing to give way.” That demand is payable!
    The demand should allow no more than 7 days in which to pay! Failure to pay within that time frame Jo should instruct his solicitor to issue a Statement of Liquidated Claim in a court of competent jurisdiction seeking cost of repairs, interest plus filing fees and costs in the cause of the action.
    If Thrifty hold to their position and do not pass it onto their insurer and believe their hirer is at fault let them cross claim against their hirer for breach of contract or as I suspect Thrifty will have their insurer indemnify the at fault driver section 20 ICAct.

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