A motor policyholder whose car was damaged by contaminated fuel will not receive a payout because the loss was not caused by a single incident.

The woman contacted a repairer last April after noticing problems with her Isuzu.

Mechanics found the diesel tank contained dirty fuel, and both the filter and housing were heavily contaminated.

They said the car’s problems appeared to be the “result of long-term build-up” of contaminated fuel.

Repair work was quoted at $21,618, and the woman also claimed $962 from her insurer for the mechanics’ report.

But Aioi Nissay Dowa Insurance declined the claim, initially citing faulty workmanship.

It later pointed to the policy’s contaminated fuel exclusion, which prevented cover unless the fuel was bought from a licensed and authorised distributor in a single transaction.

The claimant said her car had been most recently refuelled at her husband’s workplace, before which it was topped up at several regional service stations in SA.

In a dispute ruling, the Australian Financial Complaints Authority accepts that while there is no definitive cause of the contamination, several experts – including the claimant’s repairer – pointed to a long-term accumulation of faulty fuel.

“The insurer has established that the contamination did not arise from a single event. In those circumstances it is also not necessary to resolve whether or not the fuel was purchased from a licensed and authorised fuel distributor.”  

The insurer must pay $1000 compensation for “inconvenience and stress” caused by its incorrect application of the workmanship policy exclusion and poor communication with the claimant.  

See the ruling here.