Jo bought mechanical insurance cover for his Ford Falcon. One day, the radiator in the Ford Falcon defaulted and Jo took it to the garage to have it fixed. The garage checked the Ford Falcon and recommended they do a transmission flush. Jo agreed, and the garage invoiced Jo for the cost.
Jo was surprised. He was under the impression the insurer would pay the garage directly for all the costs associated with fixing his radiator.
The insurer agreed to pay for a replacement radiator but not for the transmission service because Jo’s policy excluded claims for servicing and maintenance work. The insurer called the garage, and concluded that the transmission flush was carried out as a precautionary measure.
The garage also explained Jo was clearly told he would need to pay for the transmission servicing.
On that basis, the insurer declined Jo’s claim for compensation.
Jo thought this was unfair. He disagreed that the garage had told him he would need to pay. In Jo’s view, the transmission would not have required a flush had it not been for the radiator damage which was covered by his policy. He wanted the insurer to compensate him so he contacted a community lawyer and complained to FSCL.
Review
We agreed with the insurer. In our view, while there was a link between the radiator damage and a need for the transmission flush, there was no cover for Jo due to specific exclusions in the policy.
Jo’s policy clearly excluded claims for servicing and maintenance and work that was not approved in accordance with its claims procedure. The policy only provides cover for the costs of repairs where there has been mechanical breakdown; defined as “any sudden and unforeseen mechanical failure”. But costs associated with servicing and replacement of fluids were excluded from cover, no matter how they arose.
We found that while Jo may have a claim against the garage, he did not have a claim against the insurer.
Outcome
Jo discontinued his complaint.
Key insights for the participant and the consumer
It the insured’s duty to read and familiarise themselves with the terms of their policy. The insurer cannot be liable for miscommunications between the garage and the insured. While it was a disappointing outcome for Jo, he would need to resolve any misunderstandings directly with the garage.
