FSCL Case Study

The insured bought his first car from a motor vehicle dealer for $8500. The dealer, acting as a agent for the lender, arranged the loan and included both mechanical breakdown insurance and guaranteed asset protection insurance without discussing this with him. He assumed both were compulsory and did not query their inclusion with the dealer.

A short time later the car’s lights stopped working and the insured took the car to the dealer’s mechanic. The mechanic fixed the lights but said each light was a separate claim and fell beneath the $200 policy excess. Then there was a problem with car’s exhaust, and the mechanic said the policy excluded any problems relating to the exhaust.

The man started to wonder what the insurance did cover, googled the insurance and came across a Consumer NZ article which confirmed his view that the insurance was unnecessary and not good value for money.

The man complained that he was: misled about what the policy covered and did not cover, misled about the cost of the insurance, not told that the excess would apply to each individual fault, given the impression the insurance was compulsory and not given a copy of
the policy.

The dealer responded that it had given the man all the relevant information and he had signed the loan agreement accepting the insurance. He did not accept this response and complained to FSCL.

When FSCL advised the dealer that it had started an investigation, the dealer responded immediately offering to refund all the man’s premiums, a little over $2000.

He accepted the settlement and the complaint was resolved.

December 2020

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