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Accidental damage or Mechanical failure?

Donald was enjoying a weekend ride on his motorbike when a dog ran out onto the road in front of him.  Donald stopped suddenly to avoid hitting the dog.  When Donald restarted his bike, and drove away he noticed there was a problem with the bike’s transmission. 


Donald delivered his bike to a local mechanic, and asked the mechanic to consult with his insurer.  The mechanic did not repair the bike, and returned it to Donald. 


Claim declined – no external damage

About a month later Donald emailed his insurer to find out what was going on.  The insurer did not respond, and a couple of weeks later Donald emailed again.  The claims adviser called Donald explaining the claim had been declined because there was no external damage to the bike.


Second opinion sought

Donald decided to ship his bike to Wellington, for a specialist mechanic’s opinion.  The insurer began to liaise with the specialist mechanic, and appointed an independent assessor to determine the cause of the damage.


The independent assessor gave his opinion that the damage was, most likely, caused by a worn rear bearing.  In the independent assessor’s opinion a mechanical failure caused the damage, not an accident.


Claim declined – damage not covered by policy

The insurer declined the claim, referring to the policy wording which said the insurer would only cover sudden and unforeseen accidental damage to the transmission if that damage occurred at the same time as other damage that was covered by the policy.  As there was no accidental damage, the transmission failure was considered mechanical damage, due to wear and tear and not covered by the policy.


Donald’s view

Donald did not accept the insurer’s decision.  Donald acknowledged there was no external damage but said the bike was fine before the accident, but not so after the accident.  In Donald’s opinion, the transmission failure was caused by the accident and should be covered by the policy.


Donald sold his $12,000 bike to the mechanic for $1,000 and claimed his $11,000 loss from his insurer.



We found the insurer was entitled to decline the claim.  The policy only covered sudden and unforeseen damage to the bike’s transmission if it occurred at the same time as other damage for which a claim was payable under the policy. 


Expert opinion – damage caused by mechanical failure

We accepted the loss adjuster’s expert evidence that the damage was most likely caused by a worn rear bearing, a mechanical failure, and not covered by the policy.


During our review we asked the specialist mechanic for his view on the cause of the damage.  The specialist mechanic said he respected the independent assessor, and accepted the assessor’s opinion that the damage was caused by a mechanical failure.


Inconvenience and costs during claims process

However, we considered Donald had been inconvenienced by an unexplained delay in the claims process.  When we drew our concerns to the insurer’s attention it apologised and offered $500 as compensation.  The insurer also offered to cover the costs of transporting the bike to Wellington for assessment.


We suggested Donald accept the $895 offered in full and final settlement of his complaint.



Donald reluctantly accepted the insurer’s offer.  Donald remained of the view that the accident caused the damage, but acknowledged he was not in a position to provide contrary evidence.