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Those skimping on car maintenance due to the financial squeeze could be putting their insurance at risk.
The Insurance and Financial Services Ombudsman (IFSO) recently dealt with a complaint from a woman who was turned down for a claim on her mechanical breakdown policy.
Her policy required her to service the car within 5,000km, or three months of the start of the policy.
She did not have evidence to prove she had done this, so when her transmission failed, her claim was turned down.
Her insurer said it would not accept any claim if the service requirement condition was breached.
IFSO said that meant the woman had no cover from three months after the policy began.
"Despite this, the policy had renewed the following year and [she] had continued to pay premiums for cover under which she could never make a claim."
IFSO's case manager said the fair and reasonable outcome was for the insurer to refund the premiums she had paid since that point. The customer accepted this outcome.
IFSO said it was possible that such matters could become more of an issue if the rising cost of living made it harder for people to keep up with their requirements.
"Mechanical breakdown insurance policies often include a condition that you must have your car regularly serviced. If people with mechanical breakdown insurance skip regular services for their car, they risk their insurer declining their claim when something goes wrong," a spokesperson said,
"This is likely to become more of a problem as more people are unable to afford regular car services. It's also likely that some people may be dropping their mechanical breakdown insurance altogether, because they can't afford it.
"It's important that people are aware of the conditions in their insurance policies, so they don't get an unwelcome surprise when it comes to claim time. If people are struggling to afford their insurance, or the costs of meeting conditions in their policies, we recommend they talk to their insurers about their options.
"This might include discussing ways to reduce their premiums, or talking about what insurance is right for them."
IFSO said insurers had the right to decline a claim if conditions had been breached. However, customers should not be expected to pay premiums for cover under which they could never make a claim.
