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.

An applicant's attempt to claim insurance coverage after the theft of an engine designated for his 1993 Nissan Skyline has been denied.

Despite holding a comprehensive motor policy with IAG, the insured's claim was rejected after multiple engines were stolen in a brazen ram-raid at his vehicle repairer's workshop in November 2023, prompting an appeal to the Australian Financial Complaints Authority (AFCA).

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

Insuregroup's Remarkable Growth in Truck Insurance Policies

27 Dec 2025: Paige Estritori

Insuregroup, a specialist insurance brokerage serving Australia's transport and logistics sector, has recently announced a significant milestone: processing over 10,000 insurance policies since its inception, with a 25% increase in policy volume over the past year. This growth underscores the escalating demand for comprehensive truck insurance solutions tailored to the unique needs of Australian freight operators. - read more

Australian Life Insurers Report Significant Profit Increase in June 2025 Quarter

26 Dec 2025: Paige Estritori

The Australian life insurance sector has reported a substantial after-tax profit of $360 million for the June 2025 quarter, marking a significant increase from the $116 million recorded in the same period the previous year. This impressive growth is primarily attributed to a sharp rise in investment income and improved underwriting performance across key product lines. - read more

Rising Mental Health Claims Impact Australian Life Insurance Industry

26 Dec 2025: Paige Estritori

The Australian life insurance industry is witnessing a significant surge in mental health-related claims, reflecting broader societal challenges and increasing awareness of mental health issues. AIA Australia, a leading life insurer, has reported that mental health claims now account for 23% of its total claims, up from 15% in 2014. This trend underscores the growing prevalence of mental health conditions and their impact on individuals' ability to work and maintain financial stability. - read more

Decline in Australian Life and Income Protection Insurance Premiums

26 Dec 2025: Paige Estritori

Recent data indicates a notable decline in life and income protection insurance premiums across Australia, providing consumers with more affordable coverage options. According to the latest Direct Life Insurance Report from Rainmaker Information, direct life premiums have decreased by 7% since 2024. Similarly, direct income protection premiums have seen significant reductions, with average premiums for waiting periods of 30 days and 90 days decreasing by 12% and 13%, respectively. - read more

Club Marine Marks 65 Years of Leadership in Australian Boating Insurance

26 Dec 2025: Paige Estritori

Club Marine, Australia's largest recreational boat insurer, is celebrating its 65th anniversary in 2024. Since its founding in 1959 as Marine Hull & Liability, the company has grown from a small operation in Victoria to a nationwide provider of insurance services for the country's boating community. - read more

Click for more Insurance News

Caravan Insurance Articles

Why You Should Use a Specialist Caravan Insurance Broker Instead of Going Direct

Caravan insurance is an important investment for anyone who owns a caravan. It provides financial protection against loss, damage, or theft of your caravan. While it's possible to purchase caravan insurance directly from an insurer, in this article, we explore why you should use a specialist caravan insurance broker instead of going direct - and how to choose the right one for your needs. - read more

Roadworthy and Reliable: The Comprehensive Guide to Caravan Upkeep

Maintaining your caravan isn't just about keeping it looking good; it's a crucial practice that ensures your safety on the road, as well as helping you protect your investment. A caravan represents a significant financial commitment, and just like any other vehicle, it requires regular care to maintain its value and functionality. - read more

Why Regular Caravan Servicing is Crucial for Insurance Claims

Caravanning has surged in popularity across Australia, offering a unique way to explore this vast and beautiful country. Whether you're a seasoned traveller or planning your first trip, it's crucial to understand the importance of regular caravan maintenance. - read more

Tips for Sustainable Caravanning: How to Tread Lightly on the Road

The allure of the open road and the freedom to explore has never been more inviting, or more necessary, to do so responsibly. Sustainable caravanning offers a way to embrace the joys of adventure while ensuring that the natural landscapes we cherish remain unspoiled for future explorers. But what exactly is sustainable caravanning? Essentially, it is the practice of minimizing our environmental impact while enjoying life on the road. - read more

The Importance of Reviewing Your Caravan Insurance Policy Annually

A caravan insurance policy is essential for protecting your investment against various risks, such as theft, damage, and accidents. However, your insurance needs may change with time, and your current policy might not offer adequate coverage anymore. That's why it's essential to review your policy at least once a year and make the necessary changes to ensure it still meets your requirements. - read more

Knowledgebase

Moral Hazard:
The concept that individuals may take on more risk when they do not bear the full consequences of that risk, often relevant in insurance scenarios.

This website is owned and operated by Clark Family Pty Ltd (ACN 010 281 008) as Trustee for the Clark Family Trust (ABN 35 957 893 714), 43 Larch Street Tallebudgera QLD 4228. Clark Family Pty Ltd is an Authorised Representative (AR 1298860) of Unique Group Broker Services Pty Ltd (AFSL 509434) for financial product referrals and an Authorised Credit Representative (ACR 401491) of Saccasan Pty Ltd (ACL 386297). Check our licensing details on the ASIC registers: Clark Family Pty Ltd ACR, Clark Family Pty Ltd AR, Saccasan Pty Ltd, Unique Group Broker Services.

IMPORTANT: We do not provide financial product advice or credit assistance. We act solely as an introducer and refer enquiries to licensed third-party intermediaries, insurers, and lenders - with whom you can then deal directly. We may receive a fee or commission from these third parties in consideration for the referral. Before any action is taken to obtain a product or service referred to by this website, advice should be obtained (from either the third party to whom we refer you or from another qualified intermediary) as to the appropriateness of obtaining those products having regard to your objectives, financial situation and needs. Whilst we have our own process for validating the legitimacy of our referral partners, you should always verify the credentials of your financial adviser before proceeding with recommendations that they may present. Visit the ASIC website for further information.