Sanjay’s sports car was his pride and joy, carefully maintained by a specialist garage. Sanjay had bought mechanical breakdown insurance to cover any sudden and unforeseen damage.
One day, when out driving on the open road, the car suddenly lost power. Sanjay had the car towed to his garage, who assessed the car and advised that the turbo had failed.
Sanjay submitted an insurance claim for the cost to repair the turbo. The insurer declined Sanjay’s claim relying on a policy exclusion for wear and tear. The insurer also noted that oil overconsumption had been a problem for a few years, when the car was serviced, and considered this had contributed to the turbo failure. Finally, the insurer said that it was a condition of insurance that the oil feed to the turbo be checked when the car was serviced. The mechanic said he had never checked the turbo oil feed because this was unnecessary and not part of the manufacturer’s recommended service.
Sanjay did not accept the insurer’s decision and complained to FSCL.
Sanjay agreed the car was using too much oil but said that he always topped the oil up and that the oil level was never below the manufacturer’s recommended minimum. Sanjay’s mechanic told him that the turbo should have lasted until at least 240,000km, but had only done 193,000km. Sanjay’s mechanic said that the damage should be covered by insurance.
The insurer maintained their position that:
- a policy condition that the turbo oil feed needed to be regularly serviced had not been satisfied, and as a result there was no cover
- the car had been operated with a known defect, high oil consumption, allowing them to decline the claim
- the less than optimal oil level had increased the wear and tear on the turbo bearings, contributing to the turbo failure, also allowing them to decline the claim.
Although checking the turbo oil feed might not be part of the manufacturer’s recommended service, it was a condition of the policy. Sanjay had not met this policy condition, so there was no cover.
It was also our view that while the manufacturer might expect the turbo to last for 240,000km, this expectation assumed that the car was operating at the optimal oil level. Because the car was consuming a lot of oil, three litres between servicing, with a 5.7 litre capacity, it was our view that the turbo’s life expectancy would be reduced.
We also noted that, at the service immediately before the turbo failure, there was no record of the oil level. We considered it unlikely that the oil overconsumption problem would have resolved itself and it was possible the mechanic had forgotten to check the oil, contributing to the turbo failure.
It was our view that the insurer was entitled to decline the claim and we recommended to Sanjay that he discontinue his complaint.
Insights for consumers
Make sure you check the policy conditions around servicing requirements because these might be different to the standard service provided by your mechanic. It is your responsibility to check the policy conditions are met to maintain cover under your policy.