AFCA Rules Against Engine Theft Coverage in Motor Policy Dispute

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The crux of the AFCA's ruling rested on the lack of evidence indicating the claimant's ownership of the engine, thereby negating any financial loss acknowledged under the policy. According to an AFCA ombudsman, even if ownership was established, the engine's status-intended but not installed-did not align with the policy’s definitions of 'vehicle' or 'modifications.'

Furthermore, the complainant had not opted for an additional policy benefit that could extend the cover to spare parts awaiting assembly into the insured vehicle. As a result, the claim for engine theft remains outside the current policy's provisions.

The insured also sought assistance from IAG to recover costs from the repairer, a request AFCA deemed inappropriate, emphasizing that issues pertaining to the repairer fell outside the scope of his insurance contract. This path remains a private matter between the claimant and the repairer involved.

This case highlights the critical importance for policyholders to thoroughly understand the intricacies and limitations of their insurance policies, particularly regarding coverage for vehicle components not yet integrated into the car. It demonstrates the necessity for explicit policy terms and the potential need for additional cover options to protect significant investments like spare parts.

The decision may prompt individual insurers and the wider insurance market to reassess coverage options related to spare parts and modifications to align with consumer expectations and reduce disputes. Policyholders are advised to consult their insurers to ensure adequate coverage, especially when dealing with valuable customizations or restorations. This incident serves as a valuable reminder to scrutinize insurance policies closely and engage with insurers proactively to clarify available coverage options.

Published:Sunday, 4th May 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Understanding the 4.41% Increase in Private Health Insurance Premiums for 2026

02 Mar 2026: Paige Estritori

Australian private health insurance premiums are set to rise by an average of 4.41% from 1 April 2026, marking the most significant increase since 2017. Health Minister Mark Butler stated that this adjustment reflects the escalating costs of medical and hospital services, which have risen by 5% over the past financial year. This increase is expected to impact over 15 million Australians who hold private health insurance policies. - read more

Australian Medical Association Report Reveals Erosion of Value in Private Health Insurance

02 Mar 2026: Paige Estritori

The Australian Medical Association (AMA) has released its latest Private Health Insurance Report Card, highlighting a concerning trend where Australians are paying higher premiums for private health insurance while receiving diminished value in return. The report indicates that nearly 70% of policies now contain exclusions, limiting the coverage available to policyholders. - read more

Private Health Insurers Refund $4.8 Billion in COVID-19 Windfall to Australian Policyholders

02 Mar 2026: Paige Estritori

Private health insurers in Australia have returned nearly $4.8 billion to policyholders, fulfilling their commitment not to profit from reduced healthcare service utilization during the COVID-19 pandemic. The widespread cancellation of elective surgeries and other medical appointments during lockdowns led to significant savings for insurers, who have now redistributed these funds to their customers. - read more

AUSactive's New Insurance Offering: Enhanced Protection at Lower Costs

02 Mar 2026: Paige Estritori

AUSactive has unveiled a new insurance solution designed specifically for fitness and active health professionals. This initiative aims to provide enhanced protection while offering lower premiums compared to existing market options. - read more

Health Insurance Reforms: Inclusion of Natural Therapies from 2026

02 Mar 2026: Paige Estritori

In a significant policy shift, Australian health insurers will begin offering rebates for a range of natural therapies, including Yoga, Pilates, Tai Chi, Shiatsu, Naturopathy, Western herbal medicine, and the Alexander Technique, starting early 2026. This change follows legislative amendments allowing these therapies to be covered under private health insurance for the treatment of health conditions or as part of health management programs. - read more

Click for more Insurance News