The consumer’s issue:
“I consider that my warranty agreement was mis-sold by the policy provider. When reading the terms and conditions, I noticed that it said that it did not cover cars which are owned temporarily or permanently by a business set up to sell or service motor vehicles.
Therefore, I informed the warranty company that the car was in the name of my own garage. They checked with their underwriters and said that I can be covered by the warranty policy. As a result, I bought it after fully disclosing to the business that I owned a garage.
Subsequently, I submitted a claim, which was rejected by the warranty company, because the part had not suffered a breakdown, and due to the fact that I owned a garage. But this position goes against their own engineer’s report, and because I informed them that I owned a garage before they sold me the policy.”
The accredited business’ response:
- During the initial sales call, the customer did inform the agent that they owned a garage, and the sales agent incorrectly informed the consumer that they would still be able to take out the policy.
- We acknowledge the error, and have corrected our staff training to make sure that this mistake does not happen again.
- However, the terms of the warranty agreement clearly states that cars, which are owned by motor traders, are not covered by the policy. Plus, the terms were provided to the customer, in addition to a 14-day cooling off period, during which they could have cancelled the agreement.
- Once we became aware of the error, we cancelled the policy and refunded all of the customer’s payments.
- As a general point, the warranty operates on a discretionary basis for the benefit of all its members, and any claim paid out must meet the terms of the warranty agreement.
- It would be unfair to other members for us to pay a claim that is not covered under the terms of the agreement.
- After the customer submitted the claim, we instructed an independent engineer to inspect the car. They found a fault with the rear differential, window motor and wiper motor.
- We were initially happy to cover the cost of the window motor, because the remaining faults were not sudden and unexpected. However, due to the customer being the owner of a garage, we cancelled the policy and refunded their money.
- Overall, we do not believe the consumer has a valid claim under the warranty because, as a garage owner, they are not covered by the terms of the agreement.
The adjudication outcome:
- The adjudicator found that the warranty company was unable to cancel the agreement and avoid liability for the repairs, on the basis of the information provided to the business before they agreed to sell the customer the policy.
- This is because the business sold the consumer a policy wholly inappropriate for their needs, in the knowledge that they would be excluded from cover under the terms of the policy.
- As such, the adjudicator made a decision on the liabilities of the business if the customer had not been a garage owner.
- On this basis, the adjudicator found that the business was liable for the repair costs of the window motor, but the expense for the remaining repairs was not covered under the warranty policy.
- The business was directed to cover the repair of the window motors and provide a pro-rata refund for the policy.
Conclusion:
- The customer and accredited business accepted the outcome as recommended by The Motor Ombudsman adjudicator and the case was closed.
