Warranty Holdings, a vehicle warranty company

You'll probably know if you have visited this site before that I bought a Mitsubishi Lancer Evolution 6 Tommi Makinen Edition from a Mitsubishi dealer; Dobies of Workington. An incredible car, very strongly built, but like everything else they can go wrong. That's why I bought the car complete with a [dealer-recommended] warranty with a company called "Warranty Holdings" (WHA) at point of sale.

The transfer box in the car failed in Autumn 2003 so the car went back to the dealer. A failure which has happened in other EVO's and can end in one of two ways; 1) the bolts are replaced and everything is fine, 2) damage is done to the inside of the case. Unfortunately mine was the latter problem; the casing holding the differential gears had sheared across a bolt hole. I found out that WHA were refusing to pay the claim because the "fault has not been a sudden failure". The dealer argued the toss on my behalf but it looked like I would have to pay the estimated £2,500 bill.

An assessor viewed the car on behalf of WHA and the claim was refused along the lines of "the reason for failure was down to bolts and bolts are not covered". I asked WHA for a technical reason why the claim is refused and to tell me where in the terms & conditions small print etc. it mentions that bolts are not covered.

Someone from WHA called me back to explain why there are TWO reasons the claim has been rejected...
1) The cause of the failure; ie. the bolts, are not classed as mechanical items [go figure!!]
2) As the bolts are intact the engineer speculated they must have worked loose over a period of time - so it's classed as a progressive fault (and so is not an instant failure).

As far as I was concerned when I bought the policy I was covered for any mechanical failure regardless of it taking a millisecond or a year to happen. This fault has happened prematurely and well before the expected lifetime of the car or transfer box. I personally guess that they are using a known grey area and interpreting the T&C to suit - after all it does not mention bolts/fasteners in the policy documentation whatsoever and in fact mentions the broken casing; "if any of the covered parts fail and this damages the casings they will also be covered". Obviously, the bolts are the critical item in WHA's case.

Download a PDF document which contains a history of this case. Pages 8 & 9 show relevant pages from the policy document

I went to see the transfer box at the dealers garage as it is all disassembled. Unfortunately the broken part was taken (without permission) by the assessor on behalf of WHA.

At this point I had been asking questions on the Mitsubishi Lancer Register forum and they suggested talking to an engineer by the name of Douglas Wragg. Mr Wragg is an expert witness in cases like this and I explained the problem to him and he said that I should 1) request immediate return of any parts removed from my vehicle without permission as they are my property, 2) insist on seeing the report on my vehicle.
When I get the report, and if WHA are still not going to pay out, I have to fax it to him and he'll look it over.

Mr Wragg noted that although WHA says that bolts are not classed as a mechanical item they are in fact an integral part without which most mechanical parts can not exist. Thinking about it whole engine & gearbox is held together by bolts, are they saying that conrod bolts are not mechanical, or flywheel bolts or ... hmmm there's a pattern emerging here. Anyway I spoke to WHA who gave me an address to write to in order to request a copy of the report. They also promised that someone would ring me back regarding the return of the part.

By this time I had made my own enquiries about a replacement transfer box as I could see this dragging on - the car had already spent enough time off the road. One came up for sale for under £1000 from an EVO7; a lot cheaper than the original replacement part off the shelf. I saw this was going nowhere so I bought the replacement and it was subsequently fitted and the car is working great. The repair eventually cost *me* a total of around £1,200.

I have the full report from WHA and I understand this to have been written by their assessor The main body of their report reads as follows; (this word for word, punctuation has been added by me as theirs leaves a lot to be desired)...

"In our opinion being based on the evidence observed reported and presented, the differential steel casing has become fractured due to the gradual loss of torque/loosening of the four securing set of screws/bolts. The casing has become cracked with a section detached away across one of the bolt holes.
Examination revealed no trace of any form of thread locking agent such as "Loctite" or similar. The loosening has mostly possibly occurred initially due to a lack of thread-locking agent, incorrect torque during assembly or a combination of the two. Once the loss of torque starts, vibration due to vehicle operation will have occurred between the de-clamped surfaces. This has then resulted in the fracturing of the casing. No liability was admitted along with no comment or undertaking that may be prejudicial to your case.
"

The full letter is on page 4 of the above PDF document.

On advice from Mr. Wragg I got in touch with Mitsubishi UK about this questionable report. Mitsubishi contacted their Japanese colleagues where the car was made and the findings were as such;

1) WHA say "...no trace of any form of thread locking agent..." Mitsubishi confirm that they do not, or ever have used, any kind of thread locking compound during manufacture.
2) WHA say "...incorrect torque during assembly..." - Mitsubishi said that the transfer boxes were supplied as fully checked and sealed units then fitted on the production line and they would not have any reason to suspect failure of these parts.
3) Also it's worth noting that Mitsubishi have not issued a modification or recall for this problem.

This is the full letter to WHA about Mitsubishi's findings

Lastly I tried the Financial Obmudsman and eventually got a letter back from the company who owns WHA (www.NIG-UK.com) saying that they sill are unable to move on this and no further action can be taken.

This is the 9-page document I sent to the Ombudsman as above

It transpires that an awful lot more people have been in a similar situation with WHA (source; Google searches and posts on car forums).