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An insurer has unsuccessfully tried to write off a customer’s vehicle rather than pay the considerably larger fee to rectify the faulty repair work that they themselves appointed.

In 2013, a woman’s vehicle was damaged by hail which her motor vehicle insurer repaired in 2014. The substandard repair work done on the car caused the car damage and subsequent work is still needed to rectify it.

Saying it was ‘uneconomical’ to rectify the repairs, the insurer asserted that the car was worth far less than the cost of rectifying the faulty work.

The insurer claimed that faulty repairs fall within ‘other events.’ It says that given the cost of rectification is over $14,000 and their assessment of fair market value is $8,300, the vehicle is a write off under the Queensland legislation pertaining to this vehicle.

However, the insurer’s value of the vehicle was based on its market value in 2020 including the problems it had endured, rather than market value of the car as it was in 2014 and prior to the subsequent damage.

The owner of the vehicle refuted the insurer’s claims and placed a complaint.

The claimant made a request to the insurer to:

1.  Pay the $14,000 quoted by her choice of repairer to do substantial rectification repairs

2.  Provide $2,500 compensation for time lost during the rectification and complaint process

3.  Provide $1.500 compensation for her advocate and expert witness

The insurer responded by agreeing to requests 2 and 3. They asserted, however, that the contingency on the repair quote be 10% not 15% which was granted.

A determination was made by the Australian Financial Complaints Authority (AFCA) on the matter of the first request, pertaining to the rectification of the repairs, that the insurer (IAG) should accept the quoted amount from the policy holder’s choice of repairer and pay her as a cash settlement.

In the determination paper, the AFCA stated, “After careful consideration of all the available information, I am not persuaded the insurer has not acted fairly or reasonably in writing off the vehicle. This is because the insurer has led no evidence to show the vehicle’s market value as at the time of the original incident or before the rectification.

 “The claimant has also sought a refund of premiums paid since the car was garaged. I do not accept this. The insurer was on risk for any additional damage that may have occurred. For example, if the garage collapsed or a fire occurred. Therefore, it was entitled to charge premiums.”

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