These case studies have been modified so as not to identify any actual cases at FIDReC. They are provided for purposes of learning and are not necessarily indicative of outcomes at FIDReC.
Alex owned a 7-year-old sedan. One day, he got into an accident in a carpark and damaged his car. No other vehicles were involved. Later that day, Alex filed an Own Damage Claim with his insurer and sent his car for repairs.
The repair workshop informed Alex that it would use reconditioned parts for the repairs. Alex wanted brand-new parts. He approached his insurer who refused his request. Alex then came to FIDReC.
There was an in-person mediation. The insurer’s representatives included their appointed loss adjuster. The mediator invited Alex to share his views. Alex explained that he thought that the repairs would use new parts. He was also worried that re-conditioned parts were not as safe as new parts. He shared that he frequently
ferried his young children in the car.
ferried his young children in the car.
The mediator then requested the insurer to explain their approach and address Alex’s concerns. The insurer reviewed the policy with Alex, which stated that the insurer could either choose to pay the amount of the loss or damage, or to repair, reinstate, or replace any part of the insured vehicle with re-conditioned parts. The insurer explained that any payment could not exceed the prevailing market value of the insured vehicle at the time of the loss. As Alex’s car was already seven years old, its market value was low, making it economically impractical to use brandnew parts.
The insurer assured Alex that the re-conditioned parts came with a warranty. There were also safeguards to ensure the quality and safety of the repairs.
After further discussions with the mediator, Alex accepted the insurer’s explanation and assurances. The mediation session concluded with both parties reaching a mutual understanding of the policy terms.
Key Learning Points
- Lower-priced policies may come with restrictions on whether new or re-conditioned parts may be used in repairs. Other restrictions may include who is the main driver of the car, whether the car can only be driven by named drivers, and where you can send the vehicle for repairs.
- The Policy Schedule or Certificate of Insurance contains information on the amount and scope of cover. These terms form the contract that binds both you and the insurer.
- Do review the policy documents when purchasing insurance and in the event of any accident. You can expect the insurer to abide by the policy terms.
- If there is anything you do not understand, always ask your insurer.
- For more information on points to consider before buying a motor insurance policy, please review the General Insurance Association Motor Insurance Consumer Guide.
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