In December 2013, Warren purchased a three year mechanical breakdown insurance policy.
In September 2016, Warren’s vehicle started ‘running rough’. He checked the vehicle’s motor and noticed that the electrode tip from one of the sparks plugs had broken off. Warren replaced all the spark plugs but the vehicle continued to run poorly.
Warren took his vehicle to a mechanic who told him that it was likely that the electrode tip had fallen into the motor’s combustion chamber and had caused damage. Warren submitted a claim under his mechanical breakdown insurance.
The insurance company assessor requested Warren’s permission to take the motor apart to be inspected, and Warren agreed. As suspected, the assessor’s report found that the damage had been caused by the electrode tip from the spark plug falling into the combustion chamber.
The insurance company declined Warren’s claim as the policy contained a blanket exclusion for all claims resulting directly or indirectly from a faulty spark plug. Warren was left with the mechanic’s bill for the motor to be dismantled, reassembled and the repair costs. This totalled $1,800.
Warren complained to FSCL.
Warren’s position
Warren was confused as to why the insurance company did not tell him about the spark plug exclusion clause prior to its assessment of his claim. Warren said that when he first contacted the insurance company about his claim, he told them about the missing electrode tip, and that he thought this had caused damage to the motor.
Warren was unhappy he had been left with such a big mechanic’s bill. He said that by the time he brought his vehicle into the mechanic, the damage caused by the electrode tip would have been done. No further damage would have been caused to the motor if he continued to drive his vehicle. Warren said that the vehicle was slow on take-off but once it was running, it was fine.
Warren said that had he been told that there was no cover for claims arising directly or indirectly from a faulty spark plug, he would not have agreed to have his motor disassembled. Warren said he would have continued driving his vehicle until he could afford to have the motor repaired.
Our view
We found that the insurance company was entitled to decline Warren’s claim. However, we also noted that Warren had essentially told his insurance company upfront that he was submitting a claim for damage caused by a faulty spark plug. In our view, at this point, the insurance company should have told Warren that there was no cover under the policy for claims arising directly or indirectly from faulty spark plugs.
Outcome
The insurance company agreed that it should have told Warren about the spark plug exclusion earlier than it did. The insurance company offered to pay Warren a goodwill gesture of $500 in recognition of the inconvenience caused. Warren was happy to accept this.
Warren said he understood the spark plug exclusion and only wished he had known about this earlier as it meant he would have waited to have his vehicle repaired. However, he accepted that at some point he would have had to pay for the vehicle’s motor to be dismantled and repaired.
