Written Off Car – Insurers offer £6571.94 less than car cost only 4 weeks earlier.
I guess we all think we are not going to have an accident, but if we do, we believe our insurers are going to take care of us and make sure we are looked after and do their best to safeguard us from losing lots of money. Well as we will demonstrate in this story, that’s not always the case and even when insuring with one of the biggest names in the business, you can find yourself thousands of pounds out of pocket in just a month.
We supplied a new Peugeot 308 on the 15th June 2010 to one of our customers. Unfortunately, just 3 weeks later the car was involved in an accident and was very quickly declared to be written off “for insurance purposes”, by its insurers.
What this means is that the insurance company consider the vehicle to be an uneconomic repair, it doesn’t mean it cant be repaired, it simply means that the insurance company believes it would be more convenient or cheaper for them, to give a cash payout to the customer and then sell the wreckage, getting some of the money they have paid out back.
Unfortunately, as the insured, you seem to have little choice as to how your insurers intend to proceed, as they call the tune and they hold all the cards – “not you”. So you are stuck with the decision your insurers make and short of trying to negotiate as higher settlement as you can, at the end of the day, when your insurance company say “that’s all we will pay”, well you’ve got nowhere else to go and no further redress, without making a formal complaint to the Insurance Ombudsman, who will consider your case and after talking with your insurance company, arrive at a recommendation (but that could take ages).
In this case, we paid £14410.14 + vat (£16,931.92 inc vat) for the car and it was less than 4 weeks old, with less than 2,000 miles on the clock and yet the insurer’s valuation and offer was a pitiful £8817 + vat (£10,359.98), or effectively, a stonking great loss of £6571.94 on what we had paid for it just a month earlier.
By way of justification for the derisory offer, the insurers said “We’ve placed a pre accident value on this vehicle at Glass’s Mid Book, less VAT, at £8817”
Clearly, this is not what anyone insuring a car would reasonably expect and I am writing this article to inform companies and individuals who insure cars of the way some insurers behave and this was a large insurer, a household name, but it seems even choosing one of the most reputable insurers, you may still find yourselves thousands of pounds out of pocket in just a few short weeks and have no input into what your insurers decide to do, you are in their hands entirely and it’s your insurers who decide if your car is a total loss and it’s your insurers who decide what they are going to pay you out.
It’s a shame that after being involved in an accident, at a time when you really need and expect help and support that you find yourself battling things out to just to get a fair deal. The insurance company knows you’re under pressure, because often you now don’t have access to a car and need to get something sorted for yourself and possibly your family, to get you mobile again and you are vulnerable to being pressurised into accepting an offer, purely so that you can get yourself another car.
Clearly, its time government looked at what appears to be this completely legal way of behaving and perhaps legislation should be put in place to ensure the “insured” gets compensated adequately, after all, that’s why they insure fully comprehensively, not to loose almost 40% of the cost of the vehicle in just a few weeks and I ask you, in what other industry would that be considered as fair and proper.
There are what are known as “GAP” products available and you pay a premium to insure yourself against any ‘shortfall’ you might experience as a result of a situation where your car is written off by your insurers and they don’t pay you enough to allow you to clear any finance, or buy another car and surely, the fact these “extra” policies exist at all is a damming indictment on the entire insurance industry, because its crazy that you should need to take what’s effectively a second insurance, to insure against your car insurers not giving you a fair price for your written off car.
In the past, we have found mainly that reason prevails and most insurance companies will try and negotiate a figure that their insured is eventually able to accept. That said, in almost every occasion, it requires rejecting an initial offer as clearly, insurance companies are in business to make money and the more they give you, the less they will make themselves, (I have noticed however they are pretty handy when it comes to collecting insurance premiums)
In our case, after 4 days of negotiating and getting no where fast, we told the insurance company we were going to name and shame them by publicising the issue on our web site and in the regular monthly bulletins we send out, and guess what, strangely, they said they had taken another look and increased the offer from £8817 to £13934 (£16,372.45 inc vat), a massive hike in offer of over £6,000 from the offer they had originally refused to negotiate over for the previous 4 days. Now taking an open minded view, you might say they had a change of heart, or had got it wrong or made a mistake in what hey offered us earlier, but its an amazing coincidence that the offer “got realistic” after we threatened to name and shame them.
The frightening part here is that as individuals, like you or I don’t carry that kind of clout, so how would we have ended up in our negotiations, well we will never know, but surely there needs to be some standard formula that’s used across the insurance industry to handle matters like this.
whilst we were able to pressurise the insurers that way, as an individual it’s difficult to do that and I wonder, had we not threatened them with exposing them, just what we might actually have ended up with.
So I guess the moral of this story is to choose your insurance company wisely and if you are involved in an accident, find out what your car is worth and I don’t mean a trade value (as you are not in the trade) but find out how much it would cost you to replace your car like for like (same age, make, model & mileage), then be prepared to negotiate hard and not accept what they offer you, unless you are completely satisfied with it, or alternately, you could take out some form of “GAP Insurance” or perhaps let us supply your vehicles and we will fight your corner and do our best on your behalf, should the worst happen.