A driver had his car vandalised and wanted it to be repaired by a repairer of their choice and accordingly had stipulated choice of repairer with their Suncorp policy. The complainant obtained a quote to repair his vehicle for $16,448.71. The insurer says it attempted to negotiate (assess and adjust) the value of this quote with the preferred repairer who refused. Its internal review of the quote adjusted it to $8,305.46. One of Suncorps's preferred repairers submitted a quote for $14,421.56. After assessment by the insurer, it says the fair amount to repair the insured vehicle is $8,656.46. The preferred shop agreed to repair the insured vehicle for this amount. To read this PA is chosen repairer and PS is the insurer's preferred supplier.
Below are the AFCA case notes.
The insurer accepted the claim. The complainant obtained a quote from his preferred repairer to repair the vehicle. The insurer insisted upon an alternate quote. It ultimately offered settlement based on the adjusted value of the alternate quote.
The complainant says the process undertaken by the insurer is unfair. It should authorise repairs to the complainant’s chosen repairer. Instead, it has relied on its own quote and tried to impose an unreasonable labour rate to do the repair work.
Issues and key findings
How should the insurer resolve the claim?
The insurer offered to authorise repairs through its nominated repairer (with a lifetime guarantee), or cash settle the complainant for the amount these repairs would cost. This is in line with the policy and a fair outcome.
Why is the outcome fair?
The insurer has complied with the terms of its policy and will permit the complainant the option to use his nominated repairer. It simply will not pay more than what its repairer says it will cost to do the work. There is no evidence the insurer’s quote is insufficient or not viable. The insurer says this repairer is prepared to do the work and will provide a lifetime guarantee on the quality of the work.
1.3 Determination
This Determination is in favour of the insurer.
Depending on the complainant’s choice, the insurer must either:
-
arrange repairs through its chosen repairer, which will be subject to a lifetime guarantee, or
-
settle the complainant for the amount quoted by its chosen repairer, with the complainant
to arrange the repairs himself.
-
2.2 Why is the outcome fair?
-
-
The insurer has complied with the terms of its policy and will permit the complainant the option to use his nominated repairer. It simply will not pay more than what its repairer says it will cost to do the work. There is no evidence the insurer’s quote is insufficient or not viable. The insurer says this repairer is prepared to do the work and will provided a lifetime guarantee on the quality of the work.
Complainant has not demonstrated the options presented were unfair
The complainant believes the insurer’s position is unreasonable. In summary, he says:
-
- the choice of repairer option should permit the complainant to choose who does the work
- the insurer has not been transparent about the labour rate it will allow for the repair of the vehicle
- there is no evidence to show the PA quote is not ‘reasonable’ as outlined in the policy
-
the insurer’s approach and insistence on an apparent reduced labour rate is a breach of utmost good faith.
I accept the complainant retains the choice of who does the work on his vehicle. The insurer has not insisted that he have the vehicle repaired through PS (preferred supplier). It merely says (subject to the policy conditions) it is not obliged to pay more than what PS quoted to repair the vehicle.
This means the complainant may still elect to have chosen shop repair the vehicle. PA will have to either match PS’s quote or come to an arrangement with the complainant for any additional amount it considers should be paid.
Whilst the complainant says there is no evidence the PA quote is not ‘reasonable’, the policy also says the work must be done in a ‘cost effective manner’. The insurer clearly does not agree PA’s quote is ‘cost effective’, as evidenced by the difference with the PS quote. PS is willing to repair and warrant the vehicle for a (significantly) lesser price. I am satisfied the insurer may rely on this as a basis for settlement.
There is no evidence the insurer’s position is unfair or unreasonable. There is no evidence PS is not suitably qualified or able to attend to the repairs. The insurer has not said PA is unsuitable either. It merely notes that PA would not permit an adjustment of the quote (which is normal for an insurance claim). PS agreed to do the work at a more competitive rate.
The complainant says the insurer has permitted increased labour rates at its discretion for previous matters. I do not consider this relevant. PS is willing to do the work to industry standard at a reduced price compared to the PA quote. This is the essence of competitive quoting. PA is at liberty to match this offer if it chooses. It evidently elected not to. Pursuant to the terms of the policy, the insurer is entitled to rely on the PS quote as a basis for settlement.
Whilst I acknowledge the insurer may benefit from a favourably negotiated labour rate with PS (or any other repairer it has a relationship with), this does not invalidate the quote. As PS can attend to the repairs at the quoted price and offer a lifetime warranty, I consider the arrangement is fair.
The complainant says this rate is too low and not reasonable, but the fact that PS is willing to do the work for the adjusted rate says this is not the case.
-
-
- You can read the full case file here.
-