Posted by Andrew Clarkson on December 31, 2013, 4:46 pm Edited by board administrator January 4, 2014, 12:59 pm
Hi,
In Peters' post under the DPF removal thread he mentions claiming on the insurance, under the poor workmanship clause, in the event that a customer makes a claim for the removal of the DPF. I think that this could bring about a lot of arguing.
We currently are going through a claim. The customer supplies a re-conditioned engine for us to fit. Everything is ok, runs ok, goes through MOT ok, and is returned to customer who lays the vehicle up for a few months. One day he jumps into the van, drives down the motorway and the engines seizes.
The engine is stripped by the re-conditioners who then blame us. Customer says he will claim off us. We submit all of the details to our insurance.
Even though we have £5M of Public Liability cover, the insurance company refused the claim. The reason given is quoted from the 'Policy Wording' (small print).
'We will not indemnify you against legal liability in respect of:- damage to that part of any property on which you or any persons acting on your behalf are or have been working and which arises directly from such work'.
There is also another get out clause in the policy wording:-
'We will not indemnify you against legal liability in respect of:- any advice, treatment, design formula or specification provided by you or on your behalf for a fee or in circumstances where a fee would normally be charged'.
This 'Policy Wording' is 100 pages long and you have to download it from their website.
This is a motor trade policy from Arista.
Basically they say we are not insured for jobs that go wrong. Only basic 3rd party cover for any other damage caused as a result of our work.
From our experience I don't think an insurance company will be willing to co-operate on a claim over DPF removal.
As I said this is currently a situation we are going through and we will be taking things further against the insurance broker and company next year.
Please guys' take the time to read your 'Policy Wording' (small print) carefully.
Sorry for the long post, I tried to keep it short.
Happy New Year everyone.
Andrew,
Re: Motor Trade Insurance
Posted by aidan birley on December 31, 2013, 5:23 pm, in reply to "Motor Trade Insurance" Aidan Birley
Andrew
Sorry to hear of your problems over this, fitting reconditioned engines is always a risky business.(voice of experience ! )
Out on interest can you elaborate on the circumstance of the failure and the reason the re conditioner give for failure / rejecting the claim.
I don't want to give too many details just yet as this is an on-going claim. Although we have made the customer a substantial offer to get his van back on the road, he has refused this and wants considerably more. We are contesting this and believe we have a very good defence. This is a job gone wrong and we cop for it as we are the easier target. We will also look at the possibility that we have been mis-sold insurance.
What prompted me to post this now is that in the DPF delete thread, Peter refers to presenting any DPF removal claims to the insurance. That thread is getting quite long, that's why I've started this thread.
DPF removal is not an accident. You know what you are doing and why. As you can see from our experience and the get out clauses that I have stated, I think it would be very difficult to get the insurance companies to cover DPF removal claims.
As I said earlier I would like to urge people to look at your 'Policy Wordings' (small print) to make sure you have the necessary cover for your business and not to rely completely on Brokers' or Advisors'.
I am sure that there are a lot of other people out there with very similar motor trade policies to ours.
Regards,
Andrew,
Re: Motor Trade Insurance
Posted by Peter Warman on January 1, 2014, 12:31 pm, in reply to "Re: Motor Trade Insurance" Peter Warman
Hi Andrew
I have posted the email that I received from the insurance underwriter
My original email was to my broker who forwarded the query onto the underwriter, the reply below is from the underwriter back to the broker and me, hence the insurance jargon
My original question was: I was asking if I would be covered for remapping for performance and removal of the DPF's and failing MOT's in February
Is my interpretation correct?
----------------------------------------------
"The remapping risk I did with Arista (Austec) was all about fuel consumption and efficiency, the output was slightly different but the insurance process is similar.
Couple of things spring to mind here:
PL / Servicing indemnity - You will need to amend the business description / and advise the point about the MOT (I assume MOT cover included under NIG policy) - this will pick up TPPD &/or injury following an element of defective workmanship on this front - however I imagine there will be a financial cost exclusion somewhere in there. Check the wording it may not, if it doesn’t then that's really good and you need to promote that with the client - for me defective workmanship is a Financial loss cover pure and simple , any injury / damage / loss of life is a TPPD claim and subject to the business description being correct (i.e. Mapping for the purposes of Performance included) I cant see an issue on the liability side, it’s the financial loss element you need to consider.
Financial loss element are broken down in two areas:
Costs to insured for rectification / defective products &/or services Third Party Financial loss - following either Defective workmanship (both products and services) and following poor design / advice or implementation.
Lets explore those further.
Product Recall - Currently a PI policy nor a PL policy will cover the INSURED's or Third Party cost of rectifying the faulty service provided - for example going out and replacing all the faulty units - this is if you a like a parent DE cover....... It gets even trickier in a min so hold tight.
Professional Indemnity - This is your financial loss element following poor design / advice or Errors / Omissions following that faulty design /advice, it doesn’t cover Fin Loss following defective workmanship........so if the units have a design implementation issue, Third Party financial loss is covered and in some cases will pick up the rectification works, however the more likely scenario is the units are installed incorrectly , that's product recall on the financial side, and PL on the injury side (subject to insurers acceptance of the revised business description)
Certainly as far as cover goes, no cover doesn’t exist at present, so we need to review / amend according to the client's request.
Peter - I have copied you in so you can see the process involved here sir. Re-mapping is a relatively new exposure (as far as insurers go - remember the long tail element to them is defined by application of service, losses occur, they go through the courts and the claims are paid) so it takes an insurer longer than the customer (you) to experience the trends of losses etc.
I know RSA were significantly burnt in the early days on these risks, probably didn’t know what they were getting into before it was to late.
That being said we do and have done these risks in the past, granted normally the other way for fuel efficiency etc., but for me the process is still the same.
It really depends how far you wish to go with it Peter, currently your not covered (liability only basis) for the works, but that's simply a business description issue with NIG should they agree. The tricky part is working out from your customer base / staff experiences & skills where you wish to place your hat in terms of cover.
The above blueprint outlines the belt and britches attitude, as you would expect from a broker / insurer but we accept that if you only do an handful of Re-mapping jobs then it’s a mute point. That being said Financial lines claims (such as product recall & Professional indemnity) are at a record high currently so we need your input on this one Peter.
If re-mapping is to be a cornerstone of your business then we need a sit down really, if it's a general question then the answer is above.
I'm happy to discus directly if you wish to give me a call on the mobile. There's certainly some areas to consider, but frankly if you talking about financial loss / rectification then Public / Products liability doesn’t go far enough."