Insurer to pay for BMW damage after double defeat before AFCA
The industry ombudsman has ordered an insurer to pay more than $20,000 for damage caused to a BMW while it was being repaired, after it twice rejected claims for the vehicle.
The M6 coupe suffered engine damage from contaminated fuel in December 2023 and was towed 300km from the owner’s property in regional Victoria to AAI’s preferred repairer in Melbourne.
The insurer then rejected the claim, but it reversed its decision after the owner complained to the Australian Financial Complaints Authority. It ultimately cash settled for $55,246.
When the car was returned, the owner found scratches, dents, damaged wheel rims, missing trim and other defects.
AAI argued it was not liable because the owner privately authorised the repairs after the original claim was declined.
But AFCA says AAI was responsible because, by the time it accepted liability for the original claim, the engine had been taken apart by its preferred repairer. This left the owner little option but to accept the car being fixed there.
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Photos taken before and after the repairs supported the owner’s claim the vehicle sustained damage during the process.
“I am satisfied the damage occurred while the vehicle was being towed or repaired, and it is fair that the insurer bear responsibility for that damage,” an AFCA adjudicator said.
AAI must pay $21,285 plus interest for damage to the car, $695 for a replacement battery and $2000 compensation for non-financial loss.
“The insurer continued to decline liability in circumstances where damage to the vehicle arose from the insurer’s nominated repairer and where it should have been apparent that the damage occurred during the repair process,” the ombudsman said.
“The insurer relied on a technical argument rather than considering if the damage was likely to be covered in any event. As a result, it has taken almost two years for this matter to resolve. This, in my view, is longer than should be expected during an ordinary insurance claim.”
See the ruling here.