Australian motorists have been given a significant boost with the Australian Financial Complaints Authority (AFCA) recently enforcing genuine choice in motor vehicle insurance policies, instructing a car insurer to use a motorist’s choice of repairer, instead of the insurer’s preferred repairer.
The Victorian Automobile Chamber of Commerce (VACC) has declared this a win for industry and motorists. “AFCA found in favour of the consumer because the consumer had purchased an insurance policy that gave them the right to choose their repairer, and the insurer was found to not have met its contractual obligations, under the policy, in refusing to allow the consumer to exercise this right,” said VACC CEO, Geoff Gwilym.
“Insurance policies usually give the insurer a discretion to reject the consumer’s chosen repairer where the insurer considers that the chosen repairer’s estimate is unreasonable. We have had a situation in the car insurance industry for many years whereby some insurers reject reasonable repair estimates made by repairers, chosen by the consumer, in favour of another workshop preferred by the insurer.” The insurer-preferred repairer typically provides a much lower repair estimate than the consumer’s chosen repairer.
“Frustratingly, the consumer is often not told why the insurer’s repair estimate is much lower and the insurer may also use the lower repair estimate to cash settle the policyholder, which is unfair,” added Gwilym. “What this behaviour encourages is underfunded or incomplete repairs – or unfair cash settlements. It was a race to the bottom until AFCA stepped in with this historic decision. VACC members want to see the end of vehicles being poorly repaired. AFCA has restored the policyholder’s choice of repairer rights and a right to have their vehicle repaired to a safe standard.” VACC estimates that the case is relevant to 90 percent of all choice of repairer repair complaints that policyholders have with car insurers.
“Before this decision, often cars that needed to be re-repaired were returned to the workshop that lost out on the original quote for the job to be ‘made good’. So, getting the right repairer in the first place may actually save insurers time and money by following the AFCA order.” AFCA’s finding is a game changer for independent panel repair businesses and the motorists they serve.
“This ruling reinforces a motorist’s right – where they have a ‘choice of repairer’ policy – to have their vehicle repaired where they choose. VACC’s advice to motorists is that if an insurer insists on a different repairer, they should be provided with an explanation that transparently explains the proposed repair methods and if new or second-hand parts are being used.”
“Having ‘choice or repairer’ in a car insurance policy is critical and every motorist should demand it from their insurer,” concluded Gwilym.