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
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

Markel Insurance Strengthens Australian Presence with New Perth Office

08 May 2026: Paige Estritori

Markel Insurance has recently expanded its Australian operations by opening a new office in Perth, Western Australia. This strategic move aims to bolster the company's local underwriting capabilities and provide more tailored services to businesses in the region. - read more

Cowbell Introduces AI-Driven Cyber Insurance Solutions for Australian SMEs

08 May 2026: Paige Estritori

Cowbell, a leading provider of adaptive cyber and specialty insurance solutions, has officially launched its operations in Australia, introducing 'Prime One,' a standalone cyber insurance programme tailored for small and medium-sized enterprises (SMEs) with annual turnovers up to A$100 million. This initiative is backed by Zurich Australian Insurance Ltd, combining Zurich's financial strength with Cowbell's AI-powered underwriting platform. - read more

Sompo Strengthens Australian Market Position with New Underwriting Team

08 May 2026: Paige Estritori

Sompo, a prominent provider of commercial and consumer property and casualty insurance, has expanded its Australian operations by appointing a nine-person underwriting team based in Sydney and Melbourne. This strategic move aims to enhance the company's local underwriting capabilities across key sectors, including property, casualty, financial lines, energy, and construction. - read more

Europ Assistance Australia Now Underwriting Its Own Travel Insurance Policies

07 May 2026: Paige Estritori

In a significant development for the Australian travel insurance sector, Europ Assistance Australia (EAA) has been granted a general insurance licence by the Australian Prudential Regulation Authority (APRA). This authorisation enables EAA to underwrite its own travel insurance products, marking a pivotal step in its commitment to the Australian market. - read more

ATIA Pushes for Permanent Travel Insurance Sales Rights for Agents

07 May 2026: Paige Estritori

The Australian Travel Industry Association (ATIA) is intensifying its efforts to secure a permanent authorisation for travel agents, tour operators, and accredited travel businesses to sell travel insurance at the time of booking. This initiative follows an exemption granted in 2021, which is set to expire in October 2026. - read more

Click for more Insurance News