Insurer changes rules after Fair Go goes into bat for driver who wrecked fuel tank by adding incorrect additive

Twice a week, New Zealand’s largest insurance company says it is receiving a new claim for tens of thousands of dollars of damage done to cars by a mistake when filling up at the pump - but until now the answer has been sorry, no cover.

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IAG is taking a proactive stance with the increasingly common issue of mistakes at the pump. Source: Fair Go

“It is a rapidly developing issue,” says IAG’s Judith Harvey.

Until Fair Go intervened, some motorists were having to cover the damage themselves, but that is changing.

“This is not small claims that are being made. This is extensive damage when a diesel exhaust additive is added to a vehicle,” says Ms Harvey.

The additives are sold under various names. AdBlue is one. GoClear is a New Zealand-made version. They are a mix of water and ammonia that gets injected into stinky diesel fumes inside the exhaust system to scrub out nitrogen oxide, a major pollutant.

The result is fresher, healthier air and less environmental damage with no loss of vehicle performance.

But the additives are only ever meant to be used in certain new diesel vehicles that are made with a specialised system fitted. They should never be put directly into a fuel tank.

Yet they are every week and Fair Go is aware of damage claims well over $10,000 and one that wrote off a near-new vehicle worth nearly $40,000.

John and Ruth North were left reeling when that happened to them.

“I can’t believe that a moment’s inattention can cause so much damage,” says Ruth.

John put 38 litres of GoClear into his petrol tank at a 24-hour self-service pump, thinking it was petrol.

The pump was marked “not to be added to fuel” but in the half-dark and in the middle of long road journey, John says his alarm bells didn’t ring loudly enough.

“It was a mistake I made, I admit it fully, but it was an accident,” says John.

His insurer, NZI, one the IAG brands, disagreed at first. It said this wasn’t like someone putting diesel in a petrol tank or vice versa.

“They said they do cover fuel, but they don’t cover non-fuel going into a fuel tank,” says Ruth.

Fair Go questioned whether this was right and IAG took a long hard look and changed its policy - for the Norths and for every other private vehicle it covers. That’s roughly half the market.

“Accidents happen and that's what we're here for,” IAGs Judith Harvey tells Fair Go.

“Nobody is doing this on purpose. It is an accident and as such we believe our customers should be covered for genuine accidents such as this.”

Ms Harvey says the North’s case has given IAG a chance to look afresh at the growing problem.

“Traditionally this has been classed as mechanical and electrical breakdown and accidental damage hasn't been covered under that, but after considering this we believe that it's something that should be classed as accidental damage.”

The change takes effect from today and covers IAG’s NZ brands - AMI, NZI, State, Lantern, Swann and NAC. It may also help some who have already claimed.

“We're covering our private motor customers from here on in and we're reviewing the situation for other customers from the past,” Ms Harvey says.

The Norths have gone from gobsmacked to overjoyed. Their 18-month-old car has been written off by NZI and they’ve picked a up a brand-new model, exactly as they thought all long the policy was meant to provide.

IAG says it will continue to work with other industry players to get the message out about diesel exhaust additives, so that customers use them the right way to help the environment and avoid wrecking their cars.

Anyone who does accidentally put the wrong stuff into their fuel tank should not start the engine and should seek help immediately to have the tank drained professionally, to reduce the risk of damage.