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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.
Opinions given herein are made informally by myself as a lay-person in good faith based on personal experience. For legal advice you must always consult a registered and insured lawyer.
"Some people say The Stig chews on spark plugs and drifts while walking. Some say he is terrified of ducks, and that there is an airport in Russia named after him. All we know is that he is really barracad from The Consumer Action Group" - Jeremy Clarkson (allegedly)
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.
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).
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.
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.
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.
PUTTING IT IN WRITING & KEEPING COPIES IS A MUST FOR SUCCESS
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.
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
PUTTING IT IN WRITING & KEEPING COPIES IS A MUST FOR SUCCESS
I am currently in dispute with Motorway Direct (Trading as RAC Warranty) over a claim for a Turbo Unit. At the initial claim the garage could not get through to them because of the floods. I sent a registered letter.
When we eventually could get to them, we continued with the repair and they told the garage that they couldn't pay them but would send a cheque to me.
They then refused the claim. One reason given was that the policy was expired at the point of claim. I referred them to the registered letter showing that the fault occurred in the policy term and we could not contact them.
They then wrote back with a completely different reason for refusing the claim. (Wear and tear on a unit with less than 15,000 miles on it) I refuted that and mentioned the small claims court. They then said they would "look at" the claim. We are still in discussion between them and the garage.
I noticed recently that a new organisation "Premium First" had taken an amount the same as the previous policy premium from my bank account. They told me that Motorway Direct had automatically renewed the policy. I contacted them and they said that they had automatically renewed the cover. This time they renewed it as "AA Warranty", though the direct debit was taken on behalf of RAC warranty.
When I referred them to the letter stating that they were refusing the claim because the policy was expired, they initially denied this, referring to one of the other reasons they had given.
Luckily I had the letter in front of me. They are refunding the premium.
My outstanding claim is ongoing.
Watch this shower - They continue taking the money for the policy, but tell you it has expired if you make a claim. I have made successful claims from this policy, but it is like getting blood from a stone. I have always had to pay the bill first and reclaim although the document does say will pay the repairer direct "Wherever Possible". I have never received the full amount.
All my correspondence with them now is under registered post. Avoid any policy underwritten by Motorway Direct. This includes RAC and AA policies.
You should also send copies of any letter to the RAC and remind them that the warranty company are bringing the name of the RAC into desrepute. I wouldn't think the RAC would be too happy with that.
Thinking a bit further about this, if it is called an 'RAC' warranty then the RAC are the liable party, They are giving the warranty and have got it underwritten by an insurance company.
Daewoo sell an old model Vauxhall Astra under the Daewoo name but if it goes wrong you take it to Daewoo for rectification not Vauxhall.
This is very similar to PC World who try and fob off faulty goods by telling the customer they have to take it up with the manufacturer.
RAC Extended Warranty
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Originally Posted by StoneLaughter
Fingers crossed then, unless divine intervention provides yet another get-out....?
