Does anybody know for sure whether an insurance company is legally allowed to insist on a full engineer's report to back up the challenge I am making to the valuation they have put on my car?
Accident wasn't my fault, car has been written off which is fine but I believe insurance co. is undervaluing it. They have also allowed £75 for salvage which is unrealistic. Financial Ombudsman helpline didn't have a clue and suggested Citizen's Advice Bureau but I can't really see that they would know.
Any advice would be appreciated. Thanks!
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What's the car and what have they offered?
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Adam
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No they may not insist.
However, you cannot insist that they revise their offer.
If it got to court then what was reasonable would be considered. If they had unreasonably expected you to spend money, or if you had unreasonably refused to do so, that would carry weight.
If you were to obtain an agreement with your insurer that said you would pay, but if they then agreed the valuation was wrong that they would have reimburse you; equally if the original valuation finally stood then you would have to suffer the cost of the report.
That would be seen as reasonable.
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Car is a vauxhall Cavalier 1.8L k reg, tidy car, got 7 months MOT. They've stated £455, which isn't too bad but allowing £75 for scrap is ridiculous. We are not talking huge sums of money here, I know but it all makes a difference in looking for a comparable replacement car. It's had a fair bit spent on it and mechanically is in good nick.
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To the insurance company it doesn't matter how much you have spent on the vehicle they will give you the market price for your vehicle. The sum they are offering for it seems about right, in fact the trade in price for the vehicle is £70 according to the older vehicle section in CAP.
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Financial Ombudsman helpline didn't have a clue
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please read
www.theiob.org.uk/digest/v/valuation_of_motor_vehi...l
and note that they say:
"Usually the policy provides for payment of the ' market value' of the vehicle (or words to that effect). How do we establish that? So far as the Bureau is concerned, two points are now clear. First, that market value is not the second-hand value of the car (unless the policyholder was in fact intending to sell it before it was stolen or written off) but what a replacement of similar age, condition and so on would cost. Second, [See: VALUATION OF MOTOR VEHICLES para 2] there are different markets. The appropriate one is not, as insurers often assume,, the market for private sale and purchase of vehicles, through newspaper ads and the like, unless there is evidence to suggest that that is the market in which the policyholder intends to buy a replacement. As a general rule, the appropriate market will be the public one, so the policyholder gets what it would cost to replace the vehicle through a motor dealer,. How do we find out what that would be? All relevant evidence has to be considered, but in particular we have to rely on standard trade guides! "
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More recent publications than that quoted by Dalglish confirms that the IOB's stance is still maintained by the Financial Ombudsman Service (who took over the duties of the IOB):
www.financial-ombudsman.org.uk/publications/ombuds...m
As recently as December 2004 the FOS confirmed this is still their approach.
an extract
Sometimes the firm will argue that it would be fairer to use the ?guide trade value? (the price that a motor trader might pay). Normally this will be less than the market price that the policyholder will have to pay to replace the car. However, the trade value may be a useful indicator where the car was not in ?guide retail? condition or where there is evidence that the customer intended to buy a replacement privately.
Other sources of reference may be relevant when making or assessing a valuation. For example, we would expect the firm to look at the price guides available to the general public, especially where these suggest significantly different results from the trade guides. Specialist publications can help in the valuing of unusual or ?classic? vehicles. And it can sometimes be useful to get evidence from an independent engineer (or even from a firm?s in-house engineer), especially in relation to ?non-standard? vehicles.
Customers who dispute the firm?s assessment of a car?s market value often draw our attention to ?forecourt prices? advertised in local papers, and ? increasingly ? to prices quoted on internet sites. Generally we place little weight on such evidence. Advertised prices for cars are widely understood to be a starting point for negotiation, rather than a fixed price. And the information provided is often insufficient to ensure a like-for-like comparison of age, condition and mileage. But we do sometimes take local factors into account when deciding a relevant replacement cost. If, for example, the car has been bought recently from a reputable source, then this may be a sensible starting point for determining its market value.
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I should add that FOS consumer helpdesk is not staffed by those qualified to adjudicate on a dispute. FOS are there to adjudicate after you have been through the insurer's complaints procedure and do not adise on how a company should act prior to this process.
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Hang on, I'm confused.
Why would they deduct scrap value? They're the one's selling the car on for scrap, aren't they?
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The question seemed mainly about the insistence on an Engineer's report rather than the method of estimating value.
I am assuming that the difficulty is that they have estimated the salvage value as too high ??
"They've stated £455, which isn't too bad but allowing £75 for scrap is ridiculous.
Since the lower the salvage value the bigger a cheque will be issued.
There is a lot of nonsense spoken about what you can or cannot demand as payment for your car. And given that you have a common law duty to mitigate your losses, you cannot simply buy one from a dealer and expect that to be accepted. Especially since that would come with a warranty which yours probably didn't have - hence there is a question of improvement. Improvement can cover recent services, better tyres, better exhaust system etc. etc.
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There is a lot of nonsense spoken about what you can or cannot demand as payment for your car.
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agreed.
and the finacial ombudsman report linked by no-dosh helps here:
"We approach complaints about motor valuations in the same way that the former Insurance Ombudsman Bureau did. That approach has remained largely unchanged for many years and by now most firms should be aware of it. However, we still see a steady flow of complaints where firms appear to have handled matters differently ? to the customer?s disadvantage."
it would seem to me that as with alleged miselling of endowments, it seems that the ombudsman favours the consumer and comes down hard on any hint or sign of unfair treatment of customers by these firms.
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A slight digression, if you will allow. The FOS annual report for 2003/2004 shows a remarkably even-handed approach from the Ombudsman. The split of cases found in the complainant's favour vs those where the insurance company's stance is upheld is pretty close to 50/50.
Back on topic, the Ombudsman do allow that the value of a car should be representative of the replacement cost from a dealership unless there is good reason to believe that the insured would have sourced the car privately. As FOS don't operate on case precedence but deal with each case on its merits I can't give any firm pointers, however I would hazard an educated guess that when you are talking about cars c. £500 FOS would reasonably expect the insured to be looking at private purchases.
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As the accident was not your fault I would insist that the car was repaired to the original condition. If only to cause them more expense and hassle. I am sure that I read you could insist on this. But someone will no doubt correct me if I am wrong.
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I am afraid that you are wrong. Not to say that you can't bring pressure to bear, but in the end they don't have to. Your loss is measured in monetary terms, and that's what they have to deal with.
In any case, you would then struggle with the concept of improvement - i.e. the car could turn out better than it was before, and you would have to pay for that.
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No Do$h - the insuranc co are saying that I must dispose of the car and so I retain the £75 scrap. Therefore the £455 valuation which seems fair enough, becomes a £380 payout. Presumably they claim on my behalf £455 from the other driver's insurance co and keep the £75 difference. Phoning round local scrappies has yielded a variety of responses, ranging from not at all interested to offers of removing the vehicle for free. Only one place offered £15-20.
Mark (RLBS) - You said that they cannot insist on an engineer's report, is there some wording from some sort of document I can quote to them to substantiate that?
Thanks to everyone who responded to my post - I've printed it out to try to digest it all.
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Straightforward enough. Explain that the best offer you have had is £15-£20 for scrap. If they insist it is worth £75 as scrap (which it plainly isn't) you should insist that they handle your rejection of this offer as a formal complaint and explain that you will refer matters to the ombudsman. This will cost them £360 for a referal to FOS plus their time in handling the complaint.
I find it hard to accept that an insurer isn't using its economies of scale to place scrap with approved vehicle disposal companies. I would be changing my insurer forthwith.
Note to all..... the cheapest insurance isn't always the best.
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I am not sure from this whether this car is insured TPFT or Comprehensive but looking at the age of it then I assume TPFT? So it depends on who is making the offer. If it is a third party insurer then the ombudsman wouldn't get involved anyway. You use the courts.
If it is a third party insurer then it is in their best interest to deduct as much salvage as possible. So get them to tell you where you can get that much from. Also get your own local scrap place to quote you (it won't be much!) and use that in your claim.
If it is your own insurers that are making the offer then they would normally keep the car anyway so salvage is not an issue. The fact that salvage is being quoted makes me think this is an offer from a third party insurer. So find out the true scrap value and threaten legal action for the difference.
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Yes, ProtonGuy it's TPFT. My own company (CIS) passed the claim onto DAS legal Expenses Insurance Company Ltd. Apparently that's what they do when it's only TPFT cover. The engineer who valued it was acting on behalf of DAS. I got the impression that DAS will claim the £455 from the other driver's insurers (as the accident was his fault) keep the £75 scrap and pass onto me the remaining £380. DAS have stated in their letter this "does not necessarily mean the third party has admitted liability and therefore does not consitute an offer".
They have stated that I am now free to dispose of the vehicle.
Having looked through trade ads £455 seems ok, it's the attempt to claim £75 for scrap which is taking the pink fluffy dice outrageously because it substantially reduces the payout.
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DAS are acting for you and so your dispute is with them. They have valued your car and are hoping that CIS wil go along with the valuation to cut their own admin. DAS will have fees that they will claim separately. If DAS are claiming that you can get £75 for the scrap then get them to prove it. DAS should be attempting to claim the maximum from CIS on your behalf and so should be keeping your loss to a minimum. Ask them to substantiate the high scrap fee when most scrap yards will now charge you to take the scrap away because the price of scrap is now almost zero.
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Apparently it's common practice for such third party claims for the owner to be lumped with ditching the car and hence I guess recovering any scrap value.
You could ask whether the third party insurers would be willing to remove the car and pay the whole amount, otherwise do what is suggested and reject the offer.
H
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No Do$h - are you saying that the insurance co. will be automatically charged £360 if I refer them to the Financial Services Ombudsman? That sounds a bit extreme. A good incentive for them to revise the £75 scrap valuation.
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No Do$h - are you saying that the insurance co. will be automatically charged £360 if I refer them to the Financial Services Ombudsman?
Yup. That's the standard rate. There are variations, but that's the standard industry fee from FOS. Note, however, that there are a number of instances when the fee is not payable. Two that may apply here are a) if the FOS don't consider that the case falls within their remit, such as if FOS believe the insurer is making a commercial decision and b) where the insurer persuades FOS that the case is "Frivolous and Vexatious" i.e. it has been bought to FOS solely to cause inconvenience to the insurer and not because there is any reasonable chance of success.
As I see it, neither of these apply........ However, there is a possibility that FOS will not consider your case for a third reason: DAS are not your insurers. I would argue that as they have been referred to you by the insurers to act in recovering your uninsured losses that there is a contractual link, but it's not a scenario I have come across previously.
That sounds a bit extreme. A good incentive for them to revise the £75 scrap valuation.
My previous caveats aside, yes.
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