RAC Extended Warranty

[dw190]

I am looking into a claim for a friend on a RAC Extended Warranty.

BMW 320 Turbo Deisel Auto First Registered Feb 2002.

He bought this car in September 2005 with 60,000 on the clock. The mileage to date is 66,000.

When purchased he took out a 2 Year 5 Star RAC Extended Warranty which had an extra loading because the car has a Turbo.

The Turbo has recently failed and a claim made. RAC rely on a clause in their terms:-

WHAT IS NOT COVERED
Your insurance will not cover:

2. General maintenance and Componants failing due to Wear and Tear

A report has been obtained from a Specialist Turbo Technicians Company who give a detailed explanation as to the failure and finish with the following:

"In my opinion the seized VNT has caused the shaft to over speed, a number of the turbine blades have broken, the shaft has gone out of balanceand hammered the bearings - hence the failure."

(No mention of general maintenance or Wear and Tear)

I have checked with the local BMW service department who say there is no scheduled service period for a turbo as it is a non servicable unit.

Can anyone suggest a course of action?

[StoneLaughter]

What's a VNT?

[barracad]

Originally Posted by StoneLaughter

What's a VNT?

Variable Nozzle Turbine.

It's basically a turbocharger, made by Honeywell.

[buzby]

The warranty is basically an Insurance Policy, and you won;t be surprised that the number of objections put forward by these companies (it won't be the RAC, but an insurer using their brand) to forestall any payment. There is a possibility you can challenge their assertion, and at no cost make a formal complaint to the Insurance Ombudsman, but everything hinges on the Terms and Conditions that formed the basis of the warranty.

[StoneLaughter]

Surely if they charge an additional premium for it being a turbo car, then if the turbo breaks it should be fixed without question? I would also challenge it on their assertion that the item failed due to fair wear and tear; turbos just don't break down at 60,000 miles!! (Especially Diesel turbos which have a lower turn rate than petrol ones). Further to this I don't believe that a component failure (such as the variable nozzle seizure) can be put down to "maintenance/wear and tear".

If you were required to lubricate the device every so often, then fair enough; but as this is a maintenance free unit I would surmise that it has been designed to outlast the car - in other words the item will not normally fail due to wear and tear during the life of the vehicle. Maintenance is a non-issue as the item is maintenance free (i.e. a non-serviceable unit).

[StoneLaughter]

By the way if you end up in court, the witness you need is the mechanic at the BMW garage who told you the turbo is maintenance free.

[buzby]

Don't forget Tom, there can also be a causal connection - the Turbo may well be maintenance free but if its speeding up to destruction was caused by something else that DID need maintenance, the consequential loss woul not extend further than the primary part of failure, not the mayhem that followed it. (All depends on the T&C's of course).

The best one I hear of was a diesel laguna who's timing belt failed 2k miles short of its service replacement. The warranty company managed to argue they'd pay for the replacement timimg belt (£60) but not the £4k damage to the engine resulting from the timimg belt going AWOL.

[StoneLaughter]

But that's already been stated; the failure started when the variable nozzle on the turbo siezed.

[buzby]

In that case - if the T&C exclude consequential actions, the policyholder is effectively stuffed! (One reason I don't go overboard for warranties!)

[StoneLaughter]

You misunderstand me - the variable nozzle is part of the turbo unit. It seized, and the turbine oversped and failed as a result. As it is part of the turbo - it's covered and they're trying to pull a fast one.

[buzby]

Pulling a fast one...? (Obviously, no pun intended?) Fingers crossed then, unless divine intervention provides yet another get-out....?

[dw190]

Thanks for the replies.

I have contacted the dealer who sold the vehicle and the Extended Warranty. Quite helpful but was under the impression that the vehicle was sold in good condition and no action could be taken against the dealership. (Personally I think the dealer is as liable as the insurer as the dealer reported no faults with the vehicle at the incept of the policy and sold a 2 year ex warr)

I have left the dealer to deal with the underwriter and use his weight of business he puts to the insurer in volume warranties sold.

I have given him seven days to get a favourable response before starting the process of a small claim.

I should reiterate that the specialist report was done by the RAC's recommended specialist and does not mention "Wear & Tear" ( the term in the exclusions), it only mentions the seized VNT caused the bearing to wear.

My own opinion for what its worth is that the crux lays with the seized VNT and not General Wear & Tear.

I'm still open to any more views or suggestions.

[StoneLaughter]

I agree DW; the seized VNT is the cause of the turbine overspeed. This caused turbine blades to fail. This caused an imbalance in the turbine which caused vibration - and THIS caused shaft bearing failure, seizing the turbo altogether. The crucial point is, that I believe the variable nozzle is part of the turbo unit and inseparable from it - this means that it is part of the maintenance free turbo and therefore designed to last more than the life of the car.

[dw190]

Had a nice little telephone call this morning from the dealer.

RAC have agreed to meet the full cost of the repair.

Just a little pressure in the right direction and you can get a just result.

Thanks for all the input.

[buzby]

Great News - but can you name names? Clearly it wasn't the RAC - who was the Insurance Company?

[dw190]

Originally Posted by okonski

Great News - but can you name names? Clearly it wasn't the RAC - who was the Insurance Company?

I only spoke with the dealer over the phone. First to establish the volume of their sales which would reflect the level of warranties they were selling. I got the impression that they sold quite a few as the rep called once a week to collect the forms.

The dealer in turn spoke to someone high up at the warranty section of the RAC who spoke with the underwriter. The underwriter spoke with the repairing garage and was given verbal abuse about the warranties not being worth the paper they were printed on if they loaded for a turbo and rejected a claim (General Wear & Tear) after only 6500 miles from the inception of the policy.

I made it quite clear to the dealer that if the response was negative a claim would be made against them under the SoG & Services Act on the following basis:

1. Sold a 2 year warranty with loading for turbo on a car which had done 60,000 mls, then rejected a claim for the exclusion "General Wear & Tear"

2. Turbo is not a servicable part and has no recomendation to replace after a certain mileage. Therefore the Turbo should last the life of the car.

3. Turbo Techs report did not mention "Wear & Tear" only worn bearing due to seized VNT.


I hadn't even got round to asking for any names as the guy (the dealer) did all the donkey work with the RAC

I can only find on the Schedule:

RAC Warranty is a trading style of the Motorway Direct PLC group of companies.

MOTORWAY DIRECT PLC
WARRANTY HOUSE
SAVILE STREET EAST
SHEFFIELD
SOUTH YORKSHIRE S4 7UQ