A car owner whose claim was denied and policy cancelled over a failure to disclose modifications to his vehicle has lost his bid to have the decision overturned.

When applying for his policy with Auto & General in February 2022, the motorist stated there were no “non-standard accessories” or modifications to his Hyundai i30 hatchback. He responded the same when the policy was up for renewal in 2023 and last year.  

Last June, his claim for accidental damage was denied when the insurer’s assessor found modifications to the exhaust and air intake system.  

The insurer said if it was aware of the changes, it would not have covered the car.  

The claimant acknowledged there were alterations to the standard engine and exhaust – made after he bought the car in 2020 – but argued they did not count as modifications.  

He told the Australian Financial Complaints Authority that for the changes to be considered modifications, they would have to affect the car’s value, appearance or performance, and he argued his alterations did not.  

In a dispute ruling, AFCA says the policy defines modification as “any alteration to the car’s standard engine, exhaust system ... that changes the functionality, performance, security or value of the car from the manufacturer’s original design”.  

The authority says the changes were made by a professional and “are known to enhance the performance of a vehicle”.

“I accept a cool air intake assists in the intake of colder, denser air, which can bring more oxygen into the combustion chamber, meaning more power is generated by the engine,” an authority ombudsman said. “Similarly, a modified exhaust system also improves the performance of a vehicle by increasing airflow to the engine and at times lowering weight of the vehicle.

“I am satisfied that it is reasonable to accept that these modifications to vehicles are quite common and their impacts on the performance and therefore value of a vehicle are also well known.”  

The ombudsman says it is unlikely the complainant would be unaware of the modifications’ impact.

“I am satisfied that if the complainant disclosed the [vehicle] had the said modifications, of which he was reasonably aware, the insurer would have assessed the [car] as an unacceptable risk and therefore it would not have been on risk at the time of the accident.”  

The insurer must refund premiums paid from the inception of the policy, and reimburse the man for losses related to its failure to promptly return his personalised registration plates.  

See the ruling here.