car insurance claim

sgandtg

Firstly, apologies for any spelling/typing mistakes. I'm not thick, just a little bit intoxicated.

I have a policy through a broker (Ibuyeco) but the insurance is through Norwich Union.

At the start of January, someone drove into the back of me. Basically, the person in front of me braked suddenly as someon was supposedly about to cross a zebra crossing and I managed to stop without hitting the car in front. However, the car in behind me failed to stop in time and drove in to the back of my car, pushing me in to the car in front. No damage was done to the car in front, due to the gap between mine and their car, although my car and the car behind have been written off. Fortunately, no injuries were caused.

Anyway, I bought my car 2 months prior from an auction and stupidly admitted this when Norwich Union quizzed me about the car. I explained that I was unsure as to how much I paid for the car (although I knew I only paid £1050, plus £145 auction fees) but they explained that as I bought the car from an auction, they could only offer £1700 even though the value of the car is closer to £2700 from a dealer or £2300 from a private sale.

So, I refused the offer of £1700 but they insisted on having the receipt from the auction before considering to increase the offer. Obviously, this wasn't possible to do as I didn't want to admit to paying what I paid. So, after a week of wrangling, I accepted their offer of £1700 as I just felt that there was no point of arguing, given that I was already better off compared to what I paid for the car, although I felt agrieved that I was not getting a fair price for a car that I took a gamble on. After all, if the car turned out to be a wreck, I'd have been £150 (plus the £145 fees) worse off.

As they were insisting on the receipt, I phoned to say that I would acept their offer of £1700 as I'd paid £1600 + £145 for the car just 2 months ago. I explained that I thought I had paid considerably more for the car and thats why I had refused their first & second offer. The lady said no problem, I'll get the cheque sent out.

Cheque arrives and the cheque is for £1600. I phoned to ask why the cheque was £100 short of their offer of £1700 and was told that they would only pay based on the price I paid, ignoring any auction fees. I explained that I would not have accepted thier offer if that had been explained and she was quite adament that they were in the right (aren't they always??!!) but that somone would call back. No-one has called back despite three days passing.

Can anyone advise where I stand legally, in terms of:-

1. Does it matter where you bought the car and/or how much you paid for it? After all, if I bought the car from my brother in law for £500 (as a family discount), is the car only worth £500?

2. Should I continue to pursue for auction fees?

3. Should I save myself from wasting my time and just acept the £1600, knowing that I'm £410 up?

All advice gratefully received. Apologies for any spelling/typing errors as I've had a few too many (yes, I know I'm repeating myself, but doesn't everyone who's had 5 too many???).

SolicitorMidlands

Sorry but am I reading this right - you want to recover MORE than you paid for the car? You are better off now than you were before the accident. The whole idea of insurance is to put you back in the position you would have been prior to the accident.

You are now better off.

I would thank your lucky stars they didn't demand a note of how much you paid before releasing a cheque.

sgandtg

I can see where you are coming from and agree with you up to a point. However, if I had bought a car worth £10000 from a relative and paid him £500, should the insurance company only give me £500? If I bought a £1 raffle ticket and won a £10,000 car, would the insurance company just give me a £1?

As I said, I see where you are coming from but buying from an auction is often risky. I could go and buy an identical car for the same money and it could turn out to need major work. Thats not exactly leaving me in the same position as I was prior to the accident. What I'm getting at is that I lost a perfectly good car and will now have to take a gamble on another car from the auction. Based on what they paid, I couldn't buy the same type privately, although I do realise that I chose to buy from the auction in the first place.

I suppose what really annoys me is the fact that she never let on that the cheque would be based on £1600 and not the £1700 we agreed. If I'd kept my mouth shut about buying from an auction, I'd have been looking at a payout of around £2200/£2300. Would it have been dishonest of me to accept that amount, considering how much I paid? Possibly, but few people would turn it down.

Anyway, went to a car auction today and picked up a 55 plate 1.9CDTI Vectra for £3200. FSH(although is due a service within next 200 miles), slightly higher than average mileage (though not by much) and is in near mint condition. One of the doors has a slight mark on it which I reckon may disappear with some tcut. Rod tax is cheaper than my old car and insurance is cheaper also. Delighted with it.

dacouch

I had a similar case recently where a client had brought a car from an auction and the Insurer were trying to say they would therefore give the auction price. They tried telling me "They base the values on the channel you buy the car through" as in the auction price and tried telling me that it was in the policy.

I explained to them that this was utter rubbish as it is not in their policy booklet and they would not put it in their policy booklet as otherwise if someone bought from say a bmw dealer in mayfair and paid over the odds for the car due to the higher level of service they would not pay this client the price based on the Mayfair dealers price but on the normal market value.

The idea of insurance is that it should put you back in the same position as if you had not had the claim. They may argue that you would be profiting from the claim however this is debatable as there is no guarantee you could go to the auction and source the same car (Year, Condition & Mileage etc) and if you did manage it then the price could be more than you paid at auction as at an auction its worth what people are prepared to bid for it.

Their price they pay you should be enough for you to go and replace the car say through autotrader.

You should bear in mind that second car values is plummeting at the moment and just because a car is advertised for say £1800 does not mean it will actually sell for that amount.

You should gain evidence of the value of the car say printing details of exactly the same car in the same condition and mileage etc and go back to them and ask them to increase their offer (Use my arguement above if they say about the auction price). Bear in mind that if you find lots of cars for say £2200 they may still only want to pay you say £2000

Good luck

darich

Isn't the insurer supposed to pay out the market value of the car?
Does it matter what the op paid for it?
I'd have thought that market value and price paid are almost always different unless the accident occurs within a few weeks of buying. Any incident after that then the car would be worth less than what was paid. Would the insurance then pay out what was paid? I doubt it very much.

I think the insurance is wrong here. I'm sure you'll find the policy will say that in the event of a total loss or write off, the insurer will pay out the equivalent market value.
I'm certain it won't say "we'll pay out the equivalent auction price".

darich

dacouch wrote: »

The idea of insurance is that it should put you back in the same position as if you had not had the claim.

dacouch wrote: »

Their price they pay you should be enough for you to go and replace the car say through autotrader.

In the op's case your 2 statements are a contradiction.

I agree that insurance should return you to the same position if you hadn't made a claim but if i gave you my BMW Z4 for nothing and it was then written off, would you accept a cheque for £0? Of course not. You'd be looking for the market value so you can go buy another.

And that's where your second statement is at odds with the first. It doesn't matter that the op bought the car at auction - the market value may or may not be higher but that's what should be paid out.

Buying a car at auction does have risks but also benefits. risks are poor condition and unseen damage. benefits are buying a car for less than it's probably worth.

I think the insurer should have offered the market value, not the price at market.

dacouch

They do not contradict themselves, the purpose of insurance is to put you in the same position as you were before the claim. Thus they should pay enough so that he could replace the car with the same type of car in the same condition etc which is the market value.

darich

dacouch wrote: »

Thus they should pay enough so that he could replace the car with the same type of car in the same condition etc which is the market value.

So that means that if he got it cheap at an auction, the price he paid is irrelevant.

In my example, i could have sold you my car for £500 but you'd never buy another for that price. The price you pay is irrelevant - the market value is what should be paid out and that means the insurer is wrong and trying it on.

LadyIndecisive

http://www.financial-ombudsman.org.uk/publications/technical_notes/motor-valuation.html#9

FOS opinion, point 2.

dacouch

Good find ladyindecisive, that is exactly the point I was trying to get across, may be I was not clear in how I wrote it. Either way he is entitled to the market value of the car even if he bought it for a lower price

sgandtg

The bit that worries me about that link is point 9.

"9. vehicles recently purchased second-hand
If the policyholder only recently bought his car second-hand, we are likely to assume that the price paid was the market value, unless the insurer can provide sufficient evidence to the contrary."

Recently would be how long? 4 weeks, 8 weeks?

The Glass valuation is £2300 and parkers is £2450 so the offer is well below those figures. Point 9 does worry me though.