Man claiming engine damage was malicious sugar attack loses dispute
A man who said an unknown third party gained access to his worksite and maliciously damaged two excavators by putting sugar into the engines, causing them to fail, has lost a claim dispute.
A supervisor from the location where the two vehicles were kept stated that both had been in good working condition but all of a sudden started to break down, and that leaking hydraulic oil and loose wheel bolts that appeared to have been interfered with were found.
The vehicles eventually failed, and the supervisor was informed that sugar was found in the fuel tanks.
The man held a commercial motor vehicle policy and lodged a claim for damage to the Komatsu Excavator and John Deere Backhoe he said occurred between September 22-26 2020 with Zurich, which said the damage was from wear and tear, which was not covered, and declined the claim.
The man went to the Australian Financial Complaints Authority (AFCA) requesting Zurich cash settle the claim by paying the market value of the vehicles and ongoing storage fees.
AFCA said evidence did not indicate any malicious act or accident, but rather wear and tear and corrosion.
“The panel accepts that sugar may have entered into the engines as per photographs provided. However, the available expert evidence indicates the cause of the damage to the two vehicles was other factors, and not the alleged malicious act of a third party,” AFCA said.
Zurich’s hydraulic mechanics specialist and expert engineer were both unable to attribute any of the damage to sugar entering the engines, both finding lack of maintenance which was supported by photographs showing the vehicles in a deteriorated state, with missing track pads, advanced corrosion of track beams and cracked hydraulic hoses.
The specialist said no foreign contamination was discovered in the hydraulic system, while the mechanical engineer said the excavators were unsafe structurally, with oil leaking from both unit engines, and the defects were related to lack of maintenance and deterioration – not the addition of sugar.
While it was common to believe sugar damages a fuel system, photographs of the sugar showed it had retained its granulated structure and had not fluidised. Fuel filters extract or entrap any particulate above 5 microns, and a sugar granule has a defined dimension of 200 microns.
The engineer found the hydraulic flexible hoses and both unit engines were in the advanced stage of failure, the tracks were seized with pads missing, the Komatsu vehicle’s main crankshaft seal had a leakage, and the John Deere machine had exceeded its service life due to lack of maintenance and general wear.
“The complainant’s letter and quotations for repair are not sufficient to establish his claim that the malicious act was the cause of the damage. Nor did he provide any other compelling evidence to refute the findings of the insurer’s experts,” AFCA said.
“As the damage was not the result of an accident, but rather due to wear and tear, the insurer is entitled to rely on the terms and conditions of the policy and refuse payment.”
See the full ruling here.
