The consumer’s issue:
“I bought a 55-plate high-performance coupé in 2019, and purchased an extended warranty policy to cover me if anything happened to my vehicle, which had covered 55,590 miles at the point of sale. I expected that, if I had a fault, the warranty company would pay to have the car fixed.
Unfortunately, I had a problem with my engine, which was experiencing loud tapping and knocking noises. I took the vehicle into a dealership to get the issue diagnosed, and I was told that the engine required new tappets and camshaft adjusters at a cost of £6,990.44, so I made a claim on my warranty policy.
The warranty provider assessed my claim and told me that they wouldn’t be paying out because they thought it was an ongoing deterioration, and not a sudden failure. I complained and they sent an independent engineer out to inspect the vehicle, who said the fault was because of wear and tear. On this basis, the warranty company refused to cover my claim.
I’m really unhappy about this, as my vehicle has been off the road for four months at this stage, and I haven’t got the £7,000 to fix it. I’ve paid for a warranty to help me with this kind of issue and I’m so disappointed that they won’t pay out. I’ve now had to fund the repairs myself, and I’m looking for the cost to be reimbursed so that I’m not out of pocket.”
The accredited business’ response:
- We were made aware that the vehicle had been repaired only a few months prior to this failure, and that the repair was related to the engine.
- As such, in our opinion, the fault was caused by an ongoing deterioration and therefore cannot be considered a sudden mechanical failure.
- Our independent engineer has also concluded the defect was due to wear and tear, which supports the fact that this wasn’t a sudden failure.
- Because of this, we don’t think the policy cover applies, and we will not be contributing to the customer’s claim.
The adjudication outcome:
- The adjudicator considered the terms and conditions of the policy, which said that damage caused by wear and tear would be covered.
- As the independent engineer had concluded the fault was down to wear and tear, they thought that the policy supported the fact that the cost should be borne by the warranty company.
- As a result, the adjudicator felt that the Code of Practice for Vehicle Warranty Products had been breached, and upheld the complaint in the consumer’s favour.
- The accredited business was therefore asked to assess the claim in accordance with the terms, and to pay the consumer the amount that should have been covered under the warranty.
- The accredited business disagreed with the adjudication outcome, as they maintained that the failure had not been sudden, so the case was referred to an ombudsman for a final decision.
The ombudsman’s final decision:
- The ombudsman came to a similar conclusion to the adjudicator.
- The independent engineer’s report showed that the issue was due to wear and tear.
- The ombudsman felt that wear and tear will be inherent from the initial day of car ownership.
- If the accredited business undertakes to cover repairs related to wear, then that means on occasion, repairs which are as a result of ongoing deterioration or a gradual reduction in performance will need to be paid for by the warranty company.
- They felt a term saying that, something must be “a sudden mechanical failure”, and a term saying “wear and tear” would be covered, is a contradiction, which at least is ambiguous and could be considered unfair.
- The guiding legal principle in these circumstances is that unclear or ambiguous contract terms are interpreted in the favour of the party who did not draft the contract. In this case, that would be the consumer.
- The ombudsman did note that even though the complaint was upheld in the consumer’s favour, the claim would still need to be assessed to account for deductibles and labour rate caps. Also, the consumer had elected to have additional work done, and this was not part of the original claim. A refund for these could not be included under this claim.
- She therefore stood by the adjudicator’s award, which was to assess the claim as if it was covered, and to pay the consumer the remaining total.
Conclusion:
- The consumer accepted the decision, and the accredited business assessed the claim, making a payment to the consumer totalling £5,101.56.
