Insurance claims are emotive by nature. Something bad has happened and is normally accompanied by frustration and inconvenience. You just want the insurer to pay up quickly without a fuss.
Perhaps motor claims are the most emotive because vehicles are so vital to our daily lives and this is especially true when a vehicle is ‘written off’ and its value comes into play. If it happens to you, the following may help.
Normally, a vehicle that has sustained enough damage to be written off will not be driveable and initially recovered to a local garage, but is often quickly moved to an insurer’s approved repairer for assessment. Insurers generally write-off a vehicle when the repair costs are between 50 – 70% of its value, so older lower value vehicles can still be written off even if driveable and only lightly damaged.
Once a write-off, the vehicle is moved to a free storage facility, but that can be miles away so it is best to remove personal effects and removable ‘extras’ and also reunite any spare keys with the vehicle before it is moved.
Insurers will need the registration document and MOT certificate (if relevant) as a minimum, however it is best to supply any documentation that will help prove or enhance the value of the vehicle, such as the purchase receipt, service records and invoices for extras. If it is leased or financed they will need to know how much is owed.
The valuation can be the most contentious part as our attitude to vehicles is like houses; they cost too much to buy, but once owned are worth much more. Unless you have an Agreed Value Policy (typically for classic vehicles) or your policy offers ‘new’ car replacement (generally up to a year), insurers assess the market value at the time of the accident using trade guides and monitoring online auctions. They should offer the retail price from a reputable dealer for a comparable vehicle, however, inevitably some claimants can be disappointed. It is worth bearing the following in mind and do some research in advance so you already have a good idea of the value when your insurers make an offer.
- Insurers do not have to find you a similar vehicle.
- Adverts can help, but dealers usually sell at lower prices than advertised.
- Vehicles depreciate with age, although this problem can be overcome with Gap insurance (see next month and this Gap insurance factsheet).
- Differences in mileage, model and condition can significantly affect the value.
- Recent repairs and servicing may be costly, but do not necessarily increase the value.
- Extras such as tracker, sat nav, and signwriting do not necessarily increase the market value, although most insurers take a reasonable approach to the cost of installing similar features on a replacement vehicle.
Insurers do generally offer fair settlements for a write-off, but can make mistakes and occasionally are unreasonable. It obviously helps to have a broker on your side and you can also have an independent valuation undertaken (at your cost). As a last resort you may be able to take your case to the Financial Services Ombudsman.
Once an insurer’s offer is accepted, they will pay you less any policy excess and outstanding finance (this is paid direct to the finance company) and the salvage becomes the insurer’s property.
A few other things:
Stolen Vehicles – unless the vehicle is recovered, insurers cannot see its condition, so providing as much information to help prove its value is important. Recent photographs can help.
Courtesy Vehicles – are not usually provided for write offs. A vehicle may be provided during the initial assessment, but once the write off is confirmed it will have to be returned within a few days.
Hire Cars – if the accident was not your fault you may be able to hire a comparable vehicle and recover the cost from the insurer of the party responsible (if you have their details). Generally, insurers will pay for the hire up to a maximum of 4 days after you have received your total loss settlement.