A man claiming his unroadworthy car could not start after it was driven through heavy water has had his claim rejected with the insurer proving there was no sign of water damage.

But the Australian Financial Complaints Authority (AFCA) told IAG that it must pay for a dent to the car that occurred while it was in the care of the insurer.

IAG commissioned a report from a mechanical and data forensic expert which showed there was no evidence of water entering the engine bay and water ingress was not the cause of damage.

Instead, the expert found the car was unroadworthy, the overall mechanical condition poor, the cooling system defective, the defects were obvious and would have been noticeable to the driver, servicing was overdue, and attempts had been made to rectify the defects.

This was supported by another expert in diagnostics and repairs who found a defective ignition switch and general wear and tear.

On July 4 last year the policy holder said his partner was driving the car when it hit water on the road and water was thrown by other vehicles. Incidents within the policy coverage include accidental damage, flood, and storm.

Bureau of Meteorology data shows extensive rainfall in the period surrounding the loss, although the insurer’s investigator found the heavy rain was on July 5, not July 4, the hearing heard.

When interviewed on August 5, last year, the man said the vehicle hit a few puddles and aquaplaned, the vehicle turned off, everything stopped, and nothing worked.

The complainant says that the vehicle was fine before the incident, he did not know of any missing parts, there were no oil or water leaks and there were no issues with the head gasket.

AFCA found that the conclusions of the forensic expert “significantly challenge the credibility of the loss event as detailed by the complainant”.

But it did not support the insurer’s assertion of fraud.

“In my view, the insurer provided limited information to establish its allegation of fraud or that the complainant has not been truthful and frank. The insurer is to remove from its records and the records of anyone it has communicated with, the allegations of fraud or a failure to be truthful and frank, against the complainant,” AFCA ruled.

Click here to read the full ruling.