An insurance company has been found to be bound, under the terms of its policy, to settle a policyholder’s claim in accordance with her preferred car repairer’s quote of $5,654.40, plus interest, marking a significant win for the repairer and highlighting the misconduct of an insurer.
The policy entitled the policyholder to choose her own car repairer, but the policy also gave the insurer discretion to determine how much it would pay for those repairs. The insurer argued that the amount quoted by the preferred repairer was excessive and unreasonable and refused the policyholder’s claim.
In arguing that the preferred repairer’s quote was excessive, the insurer relied on a quote from another car repairer which was substantially lower, at $2,430.31, however the insurer had not engaged a qualified assessor to inspect the damaged vehicle.
AFCA, a not-for-profit company that settles disputes between consumers and financial firms, found that the insurer had to exercise its discretion under the policy, both reasonably and in good faith.
AFCA considered that it would have been reasonable for the insurer to engage a qualified assessor to inspect the damaged vehicle to assess the reasonable costs of repair, and that a lower quote from another repairer without an assessment was insufficient.
AFCA went on to find that the insurer had not shown that the preferred repairer’s quote was, in fact, unreasonable and excessive.
As a result, AFCA directed the insurer to pay the policyholder the amount quoted by her preferred repairer ($5,654.40) plus interest.
You can access AFCA's determination by clicking here.
If you are aware of similar disputes and you want to have them investigated by AFCA, please contact our Industry Engagement Specialist, Paul Back by clicking here.