In July, 23-year-old Jackson Emmett was the victim of an elaborate scam to steal the 1999 Subaru Impreza WRX he was selling.

Posing as a potential buyer, a well-dressed man took Mr Emmett's car for a mechanical inspection, leaving a licence, car and car keys as surety, but never returned.

It turned out the car was stolen.

While distressed about the swindle, Mr Emmett was thankful he had insurance, but this week was shocked to discover his claim to Just Car Insurance had been rejected.

"They basically said the car isn't covered if it's up for sale and that I had contributed to it being stolen because I didn't go in the car with him," he said.

"He spoke well, he was well dressed, if he was a low-life you can generally tell but he just seemed like a normal, decent guy.

"But now if I had gone with him who knows what would have happened."

Now borrowing a 15-year-old Mitsubishi Lancer, Mr Emmett said he had been anticipating an insurance payout and was experiencing financial difficulty.

He spoke out as a warning to others.

"When I opened the letter I was devastated," he said.

"I've been sitting here waiting to pay this loan and clear the debt so I can start saving for my wedding.

"I'm still paying the car off too, I still owe about $10,000. It was insured for $15,000 and the excess on that was $2500 so I would have gotten $12,500."

Just Car Insurance is underwritten by AAMI and specialises in insurance for young drivers, modified cars, high performance cars and imported cars.

In a two-page letter from the company addressed to Mr Emmett and dated September 2, claims manager Stephen Moloney outlined the reasons for the claim's rejection.

"... you are not covered for the theft of your vehicle if your vehicle was advertised for sale and was being driven by someone without you or a nominated driver on your policy being present," he wrote.

"It is clear that your failure to ensure your presence inside your vehicle whilst being test driven by the potential buyer, the purpose of which is to protect the vehicle against theft, has contributed to the loss."

Just Cars Insurance did not return calls from the Illawarra Mercury yesterday.