A motorist whose engine needed replacing after a hose burst has won a claim dispute with his insurer, which put the loss down to wear and tear.

The man said the hose cracked and leaked as he was travelling up a hill, but he was forced to continue driving due to unsafe road conditions. When he was able to stop, he found the engine was severely damaged.

A mechanic found the leak caused the engine to overheat and recommended a full engine replacement. Their report noted the car was in “sound condition” before the incident, with all other hoses and belt piping well maintained. 

But Hollard Insurance argued the hose had been “worn and cracked”.

The insurer added its policy did not cover “mechanical damage arising from you knowingly driving your car in a damaged condition”.

In a dispute ruling, the Australian Financial Complaints Authority rejects the wear and tear exclusion, noting the insurer did not make its own vehicle assessment or consult with the mechanic before reaching its conclusion.

The complainant could not have stopped upon noticing the damage, AFCA adds. The man provided photos showing he was on a “narrow and steep road” with no space for passing vehicles. 

“While it may have been technically possible to pull over at the location, given the conditions and the apparent danger involved, I consider it is unreasonable to expect him to have done so,” an AFCA ombudsman said.

The ombudsman accepts the policy did not cover instances when “a component fails to perform to its intended design specification”, and says this exclusion applied to the damaged hose but not the engine.

“The resultant mechanical damage to the engine only occurred as the complainant was prevented from pulling over to avoid further damage. If not for this, I accept the complainant would likely have stopped, preventing the engine from overheating and limiting damage to the burst hose.

“However, as damage to the radiator hose itself is excluded, it is fair that the insurer is not liable for its replacement.”

See the ruling here.

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