This raises a serious technical design question: why are two wires positioned is such a way that the insulation can be so quickly eroded by vibration so as to cause a short circuit and possible fire?

Unless it's a one-off because someone has messed up the loom assembly or its fitting, in the absence of any further details, and for the avoidance of doubt, that sounds like a prime candidate for a safety recall. I would get a free half-an-hour with a solicitor about the compensation issue and contact trading standards about any safety concerns. Squeaky wheels get more grease...