Most people should by now be familiar with the product recall of approximately 4.3m faulty tumble dryers across the UK within the Whirlpool Group including Hotpoint, Indesit and Creda, due to a fault which was originally identified in October 2015.
Many customers are still waiting for the promised modification. In my own case it was some 9 months by the time the repair was done in August 2016 but for many other customers, who knows when they will see the engineer. Whirlpool has dealt with the matter poorly but they have now started to offer replacement tumble dryers at a lower specification to absolve themselves of the responsibility of coming to modify the fault. But, as uncovered in a Daily Telegraph article on the 15th March 2016, it seems that the replacement tumble dryers may also be faulty.
This matter, in terms of insurance issues, came to my attention as Chair of the Industry Claims Working Group (CWG) organised through the British Insurance Brokers Association (BIBA), when an insurer took the decision to repudiate liability for a fire claim which emanated from one of the faulty tumble dryers.
The customer was using the dryer to the manufacturer’s instructions at the time, so there were no grounds, either moral or technical, to repudiate liability for the claim. However, what it did demonstrate is that the evolution of the accidental damage cover on household policies has caused wordings to change and the interpretation of a defective product wording has become skewed away from the original intention; the principle of insurers covering “fire, however caused”.
Due to the intervention of BIBA and the CWG, the insurers retracted the repudiation and the claim was correctly paid. The CWG itself also generated constructive dialogue with insurers that are members of the group, raising awareness of the issue, with all member insurers agreeing that the interpretation of the wording and subsequent repudiation was wrong. It also enabled them to ensure that similar claims received by their offices would be dealt with appropriately.
The one sad fact in this case is that upon referral to the Financial Ombudsman Service by the CWG suggesting that guidance be issued to insurers in the light of this case generated little interest for them to become involved. At the advent of the Financial Conduct Authority, it was suggested that it would be a “forward looking” regulator and one would have hoped that the Ombudsman might have taken a similar view, which may have resulted in a considerable amount of work being saved for their teams in the future.
However, as outlined in the national media, following immense pressure brought on Trading Standards and the relevant companies by consumers groups, in particular Which?, manufacturers advice on using the dryers affected has been updated. Click Here to see the latest in the Guardian.
This completely changes the insurance landscape because, as a result of the changed advice, any policyholder using defective equipment now, may find that a subsequent fire or damage may be excluded from their policy for not taking “Reasonable Care” or for not using a product “In line with the manufacturers instructions”. The prior will inhibit the operation of a client’s own policy the latter will inhibit the ability to claim damages from the relevant manufacturer.
All in all, the fiasco continues, but now, policyholders should be mindful of how using an appliance against the specific instruction from the manufacturer could cost them more than a new dryer!