Insurance Company not paying out car's value

[RyanB96]

Hi, 

 

Our car was recently written off due to an accident (Slipping on ice, spinning into ditch). We're now trying to claim on the insurance to get the pay out to replace the car. 

The HPI index of the car shows: 

- Forecourt = £4249 - £4550

- Private = £3550 - £3825

- Trade In = £1820 - 1960

The value of the car on markets, e.g. Autotrader for a "like-for-like" car is ~ £3500- £4000

 

The insurance company has written back with a valuation figure of £2923 and a final pay-out figure of £2488.28

 

They are deducting £200 excess - this is fine.

 

However, they are deducting a further premium-penalty. The insurance initially cost £471.73. Upon taking out the insurance, the driver was a student. The driver has since finished being a student and is now a receptionist.

 

The insurance company is saying that "had they known of the correct information/occupation, the insurance would have cost an additional premium of £41.16". Therefore, they are only paying out 91.97% of the premium.

 

The premium initially cost £471.73, so e.g. £471.73 + £41.16 = £512.89, therefore 471.73 / 512.89 * 100 = 91.97%. The penalty comes under "qualifying misrepresentation".   

 

The way they have calculated this is 

£2923 -> 91.97% penalty = £2688.28

- £200 excess = £2488.28. 

 

** NOTE - they have deducted the penalty before the excess, I think this should be the other way round which would instead lead to a higher figure of £2504.34 since it makes sense to deduct excess before premium calculations, please correct me if I am wrong here? 

 

Within their letter they have stated, and I quote

 

"The purpose of your insurance policy is to indemnify you following an insured loss. Indemnity means we will place you in the same position, in monetary terms, as you were immediately before the insured incident.

 

We do this by offering the market value. Valuing second-hand cars is not an exact science and for this reason we primarily use motor industry and Insurance Regulatory Bodies guides. They provide details of market values for the vast majority of cars available in the UK. The retail prices are examined and compared from dealers' returns of actual selling prices and the advertised prices of cars for sale on the forecourts of both franchised and non-franchised dealers, at auction and private sales." 

 

The car is a Citroen DS3 DSport HDI 110 with a mileage of 106,800.

 

Similar examples can be seen here (these 4 are closest to my car, same spec, closest to mileage) : 

- Example 1 (Note lower mileage) - £3795

- Example 2 (Note lower mileage) - £4495

- Example 3 (Note lower mileage) - £3700

- Example 4 (Note higher mileage) - £3250

***NOTE - Our vehicle also had a limited edition interior, which further increased its value. 

 

I wrote back to them reject this figure and valuation, since I can't buy a "like-for-like" vehicle for a price of £2488.28. - I'm about a grand and a half short. They have not offered the "market" value as they stated, nor have they offered placed me "in the same position, in monetary terms, as you were immediately before the insured accident". 

 

The insurance company has written back stating they had reviewed the case and increased the valuation to £3074. With the penalty and excess deductions, this is reduced to a pay-out of £2627.15. 

The insurance company is Admiral. 

 

Please let me know if any further information is needed. 

Please could I have some advice on this matter, can I challenge that pay-out, and if so, how? 

Or, will I simply have to accept the fact that I am going to have to effectively fork out a further £1400+ from my own pocket to be in the same position prior to accident? 

 

Thank you for any help, insight or advice.

 

 

 

Edited February 9, 2022 by dx100uk
added A few blank lines only..dx

[unclebulgaria67]

Vehicle write-offs and valuations

WWW.FINANCIAL-OMBUDSMAN.ORG.UK

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Our approach to write-offs and valuations for cars, motorbikes and caravans.

 

You could go to the FOS with evidence of a higher market value, but the process will take time. 

 

Go back to the Insurers with a value you want to see before the deductions ( deductions appear ok) and advise that if they diasgree you want their final letter, so you can immediately ask the FOS to review a complaint.

 

 

 

 

[RyanB96]

10 hours ago, unclebulgaria67 said:

You could go to the FOS with evidence of a higher market value, but the process will take time. 

 

Go back to the Insurers with a value you want to see before the deductions ( deductions appear ok) and advise that if they diasgree you want their final letter, so you can immediately ask the FOS to review a complaint.

Hi Unclebulgaria, 

 

Do you agree with the deductions then? 

 

I feel that for them to say, effectively "had we known of the correct information we'd have charged additional premium to start with we'd have charged 8% more then, so we're only paying out 8% less now" is ridiculous? Firstly, at the start of the policy, the driver was a student, it was only during the policy it changed, so to start with the policy was correct anyway. But secondly, surely we just pay the £41 additional premium now to receive full pay out? 

 

It seems unfair that they're deducting c.£250 for a £41 premium, of which it is only a few months where that £41 premium would be in place for. e.g. of 10 months of insurance, only 2 months would have been the additional £41. So by their own logic of percentages, then surely they only deduct that 8.03% for 2/10 of the value - the other 8/10 the information was correct? They're kind of having their cake and eating it here? 

 

Do you have a template draft that we may use to write to the insurer for the final letter? 

 

Thanks, 

Ryan 

Edited February 10, 2022 by RyanB96

[theberengersniper]

It doesn't help your immediate situation, so for that I apologise, but when you take out insurance cover, one of things you're asked to confirm you will do is notify the insurer of any change in circumstance, for you, the vehicle, or any of the named drivers.

 

Admiral's position is that a 'student' exposes a lower risk profile than a 'receptionist', for whatever reason, and that had you fulfilled your obligation to notify them of the occupation change your monthly premium would have gone up, or, if you paid annually, they would have requested a one-off fee from you.

 

So it's not quite true to say the "policy was correct". It was when you took out the cover, but was no longer a true reflection of the insured risk at the time of the accident. That's why it's probably reasonable that they're making those deductions.

I think also with car valuations rose-tinted glasses can be a slight issue. The special edition interior of your own car may have increased its value originally, but in a car of that age with over 100,000 miles on the clock, I really don't see it making any difference at all, but I've been wrong plenty of times before.

I would follow UB's advice above. Write to them, but include those valuations you've found, and let them know what you're willing to settle for. That's probably your quickest route to a Final Response, which is what you need before you can approach the ombudsman, or decide to just suck it up and stump up the difference.

[unclebulgaria67]

You are being penalised for not reporting your change of circumstances.   Insurers are allowed to do this, rather than cancel the Insurance because of the non disclosure.

 

Of course you can ask the Insurer to provide clarification regarding the deduction and ask for a copy of any information or guidance regarding this, that the staff used to make their calculation.

 

 

[RyanB96]

Having discussed in more detail with the driver, she has accepted fault for not letting the insurance company know on the change of circumstance; but it feels harsh still - they should penalise £41, not £250!

 

I'll draft up a letter to the insurance company and post here if that's okay for review  

 

[unclebulgaria67]

with a write off claim, the Insurers sometimes deduct remaining premium from the settlement, if you had been paying  by monthly instalments. Are they doing this ?

 

Your letter should just ask for a clear explanation re any premium adjustment and what penalty is being applied.  And if it is a £250 penalty where is this stated in the policy terms and conditions.

 

And be clear about the amount before deductions you are seeking and provide as much information to justify this.