What is a car insurance settlement?
The insurer must provide a settlement (Indemnity) that returns the insured to the position they were in prior to the loss.
The insured must not be in a better or worse position than they were before the loss.
What methods of settlement are available to an insurer
Cash settlement (market value or cost of repair)
The insurer has the option to choose the method of settlement.
When might an insured receive less than market value?
An insured will receive less than the market value of their vehicle when there is an excess due. On this occasion the policy excess will be deducted from the settlement. The insured will not be in the position they were before the loss.
How do insurers calculate car write off values?
The insurer will establish the following in order to value a vehicle.
Vehicle Model, engine size, power and fuel.
Date of registration/manufacture.
Date of loss.
Extras fitted to the vehicle.
Recent major expenditure.
The majority of insurers use glass's guide for vehicles up to 9 years old. Beyond that Glass's older guides or other specialist market values are used.
Insurer Valuation Disputes
On occasions the guides used by insurers are not in line with the current market trends for a particular vehicle. If an insured value is considered below the current market values it is best practice in the first instance to confirm with the insurer that the key elements of the valuation process are correct. Providing evidence of any information that may assist in the correct valuation being determined.
This evidence may include current market values of matching vehicles currently for sale, however it should be noted that these values are asking prices, not sold prices and some may be speculative and not in keeping with the overall market values.
If an agreement still cannot be reached with the insurer then the Financial Ombudsman may be able to assist. An independent inspection/valuation may also be of benefit.
What is the role of the Financial Ombudsman Service
The financial Ombudsman Service is an independent public body provides free mediation to the consumer in the event of a dispute. The Ombudsmans decision binds the business however the consumer has the right to persue the claim through the courts. The ombudsman can also award compensation.
What Conditions will the Financial Ombudsman deal with a complaint
Complaint must relate to the complainants own insurer
The insurer has been allowed 8 weeks to respond to the claim/complaint
The claimant was resident in the UK, channel Island or Isle of Man at the time of policy inception.
There is no legal claim in progress
Complainant must be private individual or small business
The complaint is within 6 months of the insurers decision
The claim is within 6 years of the event taking place
Dispute must be about a claim, sales, marketing or underwriting.