Insurance valuation on stolen vehicle does not reflect market value

mamin786

Hi All
Hope someone may be able to give me some advice.
My van was stolen recently and the insurance company have agreed to pay out for the van as they believe it is unlikley that it will be found.
They have requested that I send them the keys and all the documentation I have for the vehicle.
However they have just informed me that they will only be will to pay a fraction of what I believe the van is worth.
I have explained to them that I spent many months investigating the best vehicle my money could buy and opted for this one. It did take a long time to find the right one at the right price.
However they have now said that basically they are not in the business of paying out for a bad deals and if I paid over the odds for the vehicle then that is my fault.
However if you look at the market place, like Van Trader, E-Bay, Gumtree etc you wont find a van at the price that they have valued.
I want to just ask them to buy me an equivalent van to the one that was stolen, I just want my van back, or enough money to go out and buy an equivalent van again, with the money they are offering I would never be able to find an equivalent one.

What can I do? Do I have to just accept their offer? or is there anything I can do to show them that their valuation does not fit in with the current market conditions for this type of vehicle?

Any ideas, suggestions or advice from anyone who has been in this postions before would be very much appreciated.

Thanks All.

Fatcat1974

Hello mate,

The settlement figure SHOULD represent market value, providing you've insured the van for the correct sum in the first place. No doubt they'll have deducted a policy excess as well.

My advice to you would be to find as many examples of near equivalents as you can and send them to the claims handler to demonstrate that what they're offering is too low. (Be fair though - if you find plenty of replacements that you could buy with the settlement they're offering then you might have to accept it). If you can't replace the van for what they're offering you (taking into account the excess, which is your responsibility) then you don't have to accept it and I would recommend instigating a formal complaint followed by an application to the Financial Services Ombudsman. Hopefully it won't come to that.

I used to be a motor claims handler for Endsleigh, albeit about 15 years ago, but the principles of indemnity remain the same. If a client refused to accept an offer on the grounds of it being too low, this is what they'd be asked to do.

I'll keep an eye on this thread and will help out if I can.

mamin786

Hi FatCat
Thanks for your response.
Must say that I did give them a figure of estimated value at the time I took out the insurance, however when I go the policy documents it stated "Market Value" under the section of value.
So I will start printing of what I find on the internet in terms of equivalent vans, the "engineer" who I spoke to today said that the value they had given was the value and that he would be passing the case back to the claims departement for them to reach a decision.
I should also add that I had only owned the van for about 3 months before it got stolen, so the value they put on it now is considerably lower than what I bought it for.
Also as it is a van they quote the value minus the VAT, as I bought the van privately I paid the value with no VAT but if the person selling it were VAT registered I could have claimed the VAT back. So I guess I will lose out on that also.
Thanks.

Oscar_The_Grouch

Hi there,

Read this from the Financial Ombudsman:

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

Pay particular attention to item 9, as this confirms how they view recently purchased vehicles. I would be tempted to send a copy of this to your insurers and remind them of their obligations.

If they are not willing to up their offer, register a complaint, in writing and by recorded delivery. The letter should clearly state:

1. What you are complaining about (the valuation)
2. What you want them to do about it (increase it)
3. That you want their written acknowledgement of the complaint
4. That you expect their "Final Decision" in writing within 8 weeks.

The 8 week bit is actually the amount of time they are allowed to investigate the complaint, so there's nothing you can do about that. What you can do is log the complaint with the Financial Ombudsman either after the 8 week period or as soon as you receive the "final decision" letter, whichever is the sooner, if you are still dissatisfied.

Anihilator

mamin786 wrote: »

Hi FatCat
Thanks for your response.
Must say that I did give them a figure of estimated value at the time I took out the insurance, however when I go the policy documents it stated "Market Value" under the section of value.
So I will start printing of what I find on the internet in terms of equivalent vans, the "engineer" who I spoke to today said that the value they had given was the value and that he would be passing the case back to the claims departement for them to reach a decision.
I should also add that I had only owned the van for about 3 months before it got stolen, so the value they put on it now is considerably lower than what I bought it for.
Also as it is a van they quote the value minus the VAT, as I bought the van privately I paid the value with no VAT but if the person selling it were VAT registered I could have claimed the VAT back. So I guess I will lose out on that also.
Thanks.

How are you losing out if you didnt pay VAT in the first place.

Your entitled to market value for your van. Not an equivalent van but your van. If you paid over the odds well tough.

Fatcat1974

Anihilator wrote: »

Your entitled to market value for your van. Not an equivalent van but your van. If you paid over the odds well tough.

Yes, but Mamin is saying that he didn't pay over the odds. Insurers look at the various published guides to establish market value, but these are guides only. Market value is, of course, what his van would sell for on the open market today and what you'd have to pay for one. The principle of indemnity is to put the claimant back in the position that they were in immediately before the loss. If Mamin can demonstrate to insurers that market value is higher than they think it is, he should have a strong argument.

The only justifiable reason why insurers might be offering less than Mamin needs to replace the van is that there are simply no exact equivalents on the market, i.e. all the equivalents he's found so far are better than his stolen van. Replacing with something better than you had previously is known as betterment and goes against the principle of indemnity.

To be honest, I thought that insurers offering poor settlement figures was a thing of the past. It's difficult to comment fully on a case like this without having all the details.

dacouch

Supplying adverts for similar vehicles is seen as in effect a last resort by the Ombudsman as they are not always accurate and are viewed as an invitation of a price to start haggling from.

It is possible that if the OP bought the van privately and paid cash that as there was no VAT included that the price they paid was loaded due to there being no VAT to pay

mamin786

Hi All
Thanks for your responses,
I would like to say that after investigating the market, I have been unable to find a van that I would be able to purchase for the amount offered by the insurance company, even if I take into account excess and potentially the VAT liability.
I am not sure if I stated this but I purchased the van in July of this year after many months of searching, the van is not common and most sellers are asking for substantially more than the insurance company is willing to pay, also the majority are plus VAT, so if your an individual you will always lose out on the VAT as the insurance company will only cover the value excluding VAT. This seems to be a little unfair as the excess also comes into play. I would just prefer it if the insurance company sourced me an equivalent van and handed it over, I essentially just want a replacement to the one that was stolen, and with the money offered just cant afford one.
Anyhow still waiting to hear from the insurance company as I have refused their offer, funny how they have now gone quite as when I reported it stolen they were calling me almost two times a day.
Will keep you posted as to what happens.

P.S. Thanks for the links, very useful.

Regards.

dacouch

You have to disregard you excess when working out how much your Insurer pays you, the amount they have valued the van at is the amount thy have paid you plus the excess

welshy2000

Anihilator wrote: »

How are you losing out if you didnt pay VAT in the first place.

Your entitled to market value for your van. Not an equivalent van but your van. If you paid over the odds well tough.

I think what mamin is pointing out is:

Let’s say the insurers value the van at £100, it was bought private so VAT was not added. However the insurance company is deducting VAT from their valuation, so mamin is losing out because the VAT cannot be reclaimed, as it was not paid. Surely the insurers can't do this - I don't know.

Anyway, if the value the van at £100, they are only going to offer £85 (very roughly) after deducting VAT. Truly shocking.

Isn't market value or an equivalent van the same thing?? Wouldn't an equivalent van be worth the same/similar?

dacouch

They are deducting VAT from the valuation, an Insurer only deducts VAT from a claims settlement if the policy holder is VAT registered and entitled to recover VAT themselves