The insurance company explained that the adjustment had been communicated in a renewal notice in June, to which the policyholder consented upon purchasing the coverage. Although the car owner admitted to receiving this notice, she disclosed that she had not reviewed its content.
Challenging the new valuation, the policyholder contended that $29,700 was significantly below the market value of her car. She referenced sales listings for similar vehicles ranging from $35,000 to $44,000. However, AFCA clarified that the listings referenced do not accurately represent finalised sale prices, thereby undermining her argument.
According to AFCA, RAC Insurance's utilisation of the industry-standard Glass’s Guide for car price estimates was justified, describing it as a "reasonable sum". The authority noted it was the complainant's responsibility to read and understand the policy renewal notice.
The authority also highlighted that the cost of replacement parts alone was quoted at $29,880, validating the insurer’s decision to declare the vehicle a total loss. Although the policyholder's obtained quote was slightly lower at $27,161, it did not account for labour costs, and thus the repair was deemed economically unfeasible.
An AFCA ombudsman concluded that the insurer’s decision was fair and aligned with the policy’s terms, stating that the vehicle was uneconomical to repair, and the insurer was not obligated to undertake partial repairs.
