An insurance company in Australia lost a case where they tried to write off a vehicle that was repaired through them after the repairs caused substantial damage.
The vehicle was damaged in 2013 in a hail storm and the insurance company repaired it in 2014. The issue was that the repair work was substandard and caused even more damage that was needing to be rectified.
The insurance company claimed it was “uneconomical” to repair it due to the car being worth far less than the cost of repairs – according to the insurance company. They claimed that the substandard repair work were classified as “other events”, and given that they valued the car at $8300, and the cost to properly repair the car was going to be over $14,000, they claimed the car was a write off.
The problem was that their assessment of the vehicle’s value was based on the value of the car in 2020 which included the damage, not its value in 2014 before any of this occured.
The owner of the vehicle decided to dispute the insurer and lodged a complaint.
The vehicle owner requested for the insurance company to:
- Pay the $14,000 quoted to repair the car correctly by her chosen repairer
- Pay $2500 in compensation for the time lost during the dispute process
- Pay $1500 in compensation for her advocate and expert witness
The insurer agreed to points 2 and 3, but demanded that the contingency on the repair quote be 10% rather than the 15% granted.
The Australian Financial Complaints Authority (AFCA) determined that the insurer should accept the quoted $14,000 for the repair by the owner’s choice of repairer and pay a cash settlement.
This case shows why it’s important to get a second opinion when an insurance company makes a decision, whether it’s your insurance company or another party’s. It also shows why it’s important to get a post-repair assessment done after insurance repairs your car, so that you know if it has been done correctly or not.
