Insurance coverage with contaminated fuel

Submitted: Tuesday, Mar 04, 2014 at 20:52
ThreadID: 106547 Views:6000 Replies:6 FollowUps:8
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Hi all,

After reviewing a few posts about contaminated fuel issues, I sent an email to my current insurer RACV to see what their coverage iprovides.

RACV advises Motor Insurance does not provide coverage for

I have 2 diesel vehicles insured with RACV, when they come up for renewal I will be going elsewhere!

Phil P
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Reply By: Kris and Kev - Tuesday, Mar 04, 2014 at 21:12

Tuesday, Mar 04, 2014 at 21:12
It is tricky. I left QBE because they told me they do not provide that cover, yet they told someone else they do? I went with AAMI and got it in writing that they do provide the cover. Hopefully I will never have to make such a claim. Kevin
AnswerID: 527657

Follow Up By: Dennis Ellery - Wednesday, Mar 05, 2014 at 10:39

Wednesday, Mar 05, 2014 at 10:39
Hi Kris and Kev it may have been me.

This the body of an email I received from QBE’s Quality Assurance Specialist 5 July 2013

“As per our telephone conversation yesterday in regards to fuel contamination please refer to page 25 of the attached Product Disclosure statement. Fuel Contamination is covered in the event of a claim, you are not covered as per:
a result of using a type of fuel that is not intended for the make and model of your vehicle.
Which is noted on page 25. As mentioned to you this is not an exclusion we note in our policy for fuel contamination only that we do not cover if you use the wrong type of fuel for your car for example: your car only take ULP and you use Diesel.”
FollowupID: 810117

Follow Up By: Kris and Kev - Wednesday, Mar 05, 2014 at 11:43

Wednesday, Mar 05, 2014 at 11:43
Yes. I think it was you. It was a shame because I was happy with QBE and still have our camper trailer with them. We had to make a large claim with them last year when our camper suffered major damage and they were brilliant to deal with. Even the mechanic who sent the quote for the damage was amazed how good they were. I thought our premium would go up this year, but it did not. Kevin
FollowupID: 810119

Reply By: garrycol - Tuesday, Mar 04, 2014 at 21:13

Tuesday, Mar 04, 2014 at 21:13
I appreciate that is what they have told you but you need to have a look at the PDS. If it does not specifically mention that the policy excludes contaminated fuel then they must cover it. It is up to them to tell you via the PDS what they will not cover.

Most insurance companies now do cover it so if the RACV doesn't, you need to look if you should have another insurance company.

AnswerID: 527658

Follow Up By: Phil P - Tuesday, Mar 04, 2014 at 23:27

Tuesday, Mar 04, 2014 at 23:27
I actually have it in writing. The PDS really only mentions that they exclude mechanical breakdown.

Probably alarming myself for no reason. With the amount of diesel vehicles sold in the last few years, it is probably very rare.

FollowupID: 810102

Follow Up By: garrycol - Tuesday, Mar 04, 2014 at 23:34

Tuesday, Mar 04, 2014 at 23:34
I would seek clarification as it is not a mechanical breakdown - it is negligence on the party of another party. I guess it is a shame you got it in writing as normally what is in the PDS would apply but as you have a ruling .....

I would be changing insurance companies as the contamination issue is more common than you would think - as indicated by the number of threads on the issue.

FollowupID: 810103

Follow Up By: mike39 - Wednesday, Mar 05, 2014 at 07:58

Wednesday, Mar 05, 2014 at 07:58
Phil writes "excude mechanical breakdown"

Hmm... mechanical breakdown caused by contaminated fuel. Could be also like engine breakdown caused by using incorrect oil and other things one could think of.

When push comes to shove it could be a very grey area, particularly when the very high repair costs are involved.

Its also not unknown for insurance companies to spend more money fighting a claim than what the claim was worth.

From my perspective theres a catch 22 lurking here.
FollowupID: 810113

Reply By: Mick O - Tuesday, Mar 04, 2014 at 22:34

Tuesday, Mar 04, 2014 at 22:34
I have the Tuck Truck insured with TCIS brokers (recently merged with OAMPS). They offer 4x4 specific insurance and they do cover damage caused by dirty fuel...PROVIDING;

You stop at the instant the problem becomes apparent.

If, after discovering the issue, you elect to drive on, they will void the cover. Probably not the most convenient after getting a dirty drum load at well 23 but all the more reason to fit a secondary filter PRE the factory fitted offering and always fill from cans or drums (or suspect bowsers) using a suitable screening device like a Mr Funnel.

Cheers Mick
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AnswerID: 527666

Reply By: Member - Brenton H (SA) - Wednesday, Mar 05, 2014 at 10:31

Wednesday, Mar 05, 2014 at 10:31
That's an interesting comment that AAMI will cover fuel contamination. I had a quick read of their PDS and there are several specific exclusions that say they don't. A legal tussle may be likely?

Exclusions noted.
Viz " Costs related to your car breaking down
(e.g. mechanical or electrical failure)."

" any actual or threatened biological, bacterial, viral, germ, chemical or poisonous substance, pollutant
or contaminant"

AnswerID: 527687

Reply By: Racey - Wednesday, Mar 05, 2014 at 17:30

Wednesday, Mar 05, 2014 at 17:30
The key to this question rests with the wording of the operative clause which describes the "Cover". E.G.
We will cover loss or damage to your vehicle
caused by any of the following incidents:
an accident including a collision
malicious act
theft or attempted theft.
We will repair replace etc .......
This wording is covering specific events and clearing contaminated fuel is not included.

Alternative wording:-

If your car suffers accidental loss, damage or theft anywhere in Australia, we will choose to do one of the following: repair replace etc.....

I would contend that this operative clause clearly states accidental damage is covered and I believe it would be untenable to suggest that such damage was not accidental. Who in their right mind would put faulty/contaminated fuel in their vehicle.

Whilst some may argue the General Exclusion :-

Loss of use, depreciation, wear, tear, rust or corrosion.
Mechanical, structural, electrical or electronic breakdown, failure or malfunction.

excludes such damage, the proximate cause of the damage is the accidental introduction of the faulty/contaminated fuel. For had it not been for the introduction of such fuel the damage would not have occurred. Therefore the exclusion does not apply.

It is point to argue with your insurer if the situation arises and this style of wording is used.


AnswerID: 527711

Reply By: Member - Phil G (SA) - Wednesday, Mar 05, 2014 at 20:22

Wednesday, Mar 05, 2014 at 20:22
Let me be the devil's advocate.
I thought I paid vehicle insurance in case I pranged it or drowned it or whatever. I'd hate to see my insurance company paying out big claims for crappy fuel systems - it would put my premiums up heaps, and I might be paying for other's stupidity.

If your pump or engine is shot by adding petrol to a diesel vehicle....sure that's an accident....but not in the same sense that a prang is an accident. More an act of stupidity for which I think the owner is responsible and needs to take it on the chin and cough up the money themselves.

If your pump/injectors are shot by water in the diesel - the Fuel company or servo might take the blame for that. So how do you know which of the recent servos was at fault? Might be hard to prove.

As for the random "must be fuel contamination" that the "service department" claim is the cause of the failed injectors, that commonly fail on certain common rail diesels?? Again IMO, this is the dealers/manufacturers attempting to squirm out of a warranty claim.

As for me, I'll drive the vehicle where and when I like. I take a lot of measures tio make sure that only clean diesel reaches the pump. I'll service it as I see fit, and if the injectors stuff up, it will either be a warranty claim or I'll take it on the chin. Can't see why insurance should pay.
AnswerID: 527724

Follow Up By: garrycol - Wednesday, Mar 05, 2014 at 20:41

Wednesday, Mar 05, 2014 at 20:41
It is the last servo you went to - issue will show up only a few kms after the fill - the water goes to the bottom of the tank and is sucked up.
FollowupID: 810140

Follow Up By: Michael ( Moss Vale NSW) - Wednesday, Mar 05, 2014 at 22:15

Wednesday, Mar 05, 2014 at 22:15
Yes Gary, it happened to me 10 years ago and 2 ks down the road, my Patrol started to splutter ! Michael
Patrol 4.2TDi 2003

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FollowupID: 810155

Follow Up By: SDG - Wednesday, Mar 05, 2014 at 23:01

Wednesday, Mar 05, 2014 at 23:01
A few months back, I was holding a black nozzle pumping fuel in my car. Diesel meter ticking over, etc, and looking around, what do I see, a green sticker, just above the hole where you stick the pump into after using it, that says UNLEADED.
I stopped pumping. Double checked everything. Went into the station to confirm I was putting diesel in.
Yep. I was. Turns out it was a pump, that use to be unleaded at a different servo. (This one had been renovated) Sticker had not been removed
The assistant also told me, that the week before some lady had filled her car from the pump, thinking it was unleaded.

Never been back to that servo, even though they are the cheapest in town.
FollowupID: 810170

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