When a battery may not be a battery.

The vehicle purchase

Nina and her partner Fred purchased a hybrid Toyota vehicle from a car yard. Nina said she asked the sales agent whether the warranty/insurance provided with the purchase covered the hybrid battery system and was told it did. However, Nina had owned a hybrid vehicle previously where the warranty/insurance did not cover the hybrid battery system, so Nina contacted the insurance company to check. Nina said she was told that the vehicle she purchased would be covered as pre- 2000 hybrids were excluded, but as her vehicle was a 2006 model, it would not be excluded.

 

The claim

The battery in Nina’s new hybrid later failed and she made a claim to the insurance company for a replacement hybrid battery, costing around $4,700. The insurance company declined the claim because it said there was an exclusion clause in the policy which said there was no cover for batteries. Nina argued that the term ‘battery’ referred to standard car batteries with a cost of around $200, and did not refer to hybrid batteries which cost a lot more. Nina said that a standard battery is something that can conceivably deteriorate over time due to wear and tear which she agreed should not be covered. However, Nina said the hybrid battery essentially ‘is the vehicle’. Further as the policy specifically excluded hybrid vehicles aged prior to 2000, this inferred that hybrid vehicles from after 2000, like Nina’s vehicle, were covered under the policy.

 

The insurance company contacted the sales agent and its call centre to see whether there had been any misrepresentation about the hybrid battery being covered. The sales agent said that he explained that the insurance did not cover a hybrid battery, or any batteries in the vehicle. Also, the call centre had no record of any telephone call being made by Nina. As a result the insurance company upheld its declinature of Nina’s claim on the basis that the policy excluded cover for ‘batteries’.

 

Service issues

The sales agent then offered to repair Nina’s car. By this time Nina had already had the hybrid battery replaced by another company and had paid for this.

 

FSCL assists

The insurance company contacted Fred to seek a copy of the sale and purchase agreement for the hybrid vehicle. Nina was annoyed about this because she thought this should have been something that was checked right from the beginning and, in her view, tended to indicate the sales agent was being untruthful. Also, Nina had specifically asked that the insurance company contact her about the complaint, not Fred.

 

The insurance company apologised and advised that it had been unable to obtain a copy of the sale and purchase agreement from the sales agent and that it had contacted Fred because he was the owner of the insurance policy.

 

After Nina provided the sale and purchase agreement, the insurance company made further investigations. Nina and the insurance company agreed that the insurance company would make an ex gratia payment to her and Fred of $2,650. The insurance company made the offer on the basis that the sales agent had been unable to confirm his sales process in writing, and it could not be confirmed that Nina and Fred had been told that hybrid batteries were excluded under the policy.

 

As a result of the quick settlement offer we were able to close the investigation of the complaint within 10 working days.