A consumer body is urging car buyers, who have been mis-sold mechanical breakdown insurance, to demand a refund.
The insurance has been heavily promoted by car dealers and could add more than $1,000 to a vehicle purchase, according to Consumer NZ chief executive Sue Chetwin.
“Dealers claim the insurance will protect you if vehicle parts suddenly fail and need repair,” she explained. “But the policies typically have long lists of problems that aren’t covered, including any pre-existing faults with the car and anything deemed the result of faulty repairs.”
She detailed the case of Consumer NZ member and comedian Raybon Kan, who was sold the insurance by Palmerston North car dealer Lee European. The dealer reportedly claimed the policy would cover faults with the vehicle’s air conditioning and transmission, which a pre-purchase inspection had indicated may require repair. However, the dealer failed to provide a copy of the policy and did not tell Kan the insurance excluded pre-existing faults. Kan took Lee European to the Motor Vehicle Disputes Tribunal, which ordered the dealer to pay $2,000 for the insurance and $2,200 for subsequent repairs to the air-conditioning system.
Chetwin NZ highlighted car buyers already had protection under the Consumer Guarantees Act (CGA) and didn’t need to rely on mechanical breakdown insurance. Car dealers, she suggested, were keen to promote mechanical breakdown insurance because they stood to earn a commission on each policy sold.
“If you’ve been mis-sold mechanical breakdown insurance, demand your money back. We’ve got a template letter to help you,” Consumer NZ said. “If you don’t get a response, take it further.”
