Insurance Co want money back

Hoonercat

Hi
Last year my motorcycle was hit by a van while it was parked, other party admitted liability so no problems there.
The bike went in for assesment and came back with £2168 of damage. Some of the damage was minor cosmetics and, as I had planned to sell the bike, I rang my insurance co to ask them where I stood if I decided not to carry out all of the repairs.
The insurance co checked (not sure if it was with the underwriters or another dept) and phoned me back. I was told that it was my choice whether I had the repairs done, but either way I was still entitled to the full amount. They suggested that the best way forward was to send me a cheque minus the VAT, I would pay for the repairs that I wanted done, send them the final receipt and they would refund me the VAT on the work carried out. I was also told that if I decided to carry out the rest of the repairs at some point, then they would also meet the cost of the VAT (though no cut off date was given for this).

I agreed to this and instructed the garage to carry out the repairs by paying them in advance.
The insurance co sent me a cheque for £1885, the cost of full repair minus the VAT. The repairs came to £1120, £146 of which was VAT. I sent the receipt to the insuance co and they sent me a further cheque for £146 to cover the VAT, as agreed.
Four months later and I get a letter from the insurance co telling me that they shouldn't have sent me the cheque to cover the VAT as the initial payment of £1885 was enough to cover the repairs and VAT. They appear to be suggesting that they have overpaid me because I did not have all of the repairs carried out, despite initially telling me that I was entitled to the full amount whether all repairs were done or not.
They were fully aware that the final invoice would be less than the £2168 originally quoted, they offered to send me a cheque in lieu plus pay the VAT, four months later and they've changed their minds.

Can they do this?

Astaroth

Is it your insurers you are dealing with or are you dealing directly with the third party insurers?

If you accept cash in lieu of repairs it would be highly unorthodox to send a cheque and then advise you that they will also pay the VAT as and when/ if you get work done.... its normally take the cash or get the repairs done rather than an ongoing blend of the two.

If you went through your own insurers then this will cause them problems because of recovering the money from the third party insurers as it will be a moving amount but that is by the by.

Do you have anything in writing to what the agreement was? What have they said when you have challenged them?

Hoonercat

Hi
Thanks for the reply, I'm dealing with my own insurers and haven't answered them yet as the letter only arrived this morning.
I haven't got anything in writing but I will be insisting that they listen to the recorded conversations I had with them as it was the insurers who offered this to me rather than me asking for it.

cogito

It's a contract of indemnity which means that the insurers put you in the financial position you were in immediately prior to the loss. The loss amounted to £1120 and they've paid you £2031 so you owe them £911. Pay up and try to look happy.

Hoonercat

cogito wrote: »

It's a contract of indemnity which means that the insurers put you in the financial position you were in immediately prior to the loss. The loss amounted to £1120 and they've paid you £2031 so you owe them £911. Pay up and try to look happy.

How do I owe them £911? The repairs which weren't out carried would have come to £911, if I chose to have the repairs done tomorrow I'd still have to find £911 to pay for it.

The insurers made me the offer, I did not ask for it. The fact that I did not have all of the repairs carried out was as a direct result of the offer made by the insurers, on the understanding that I was entitled to the full amount of the estimate, minus VAT for any work NOT carried out. Had they said that they wouldn't give me the full amount I'd have had all of the repairs done.

*MF*

Not sure about this, but perhaps what the Insurers are saying still makes sense.

Say you went ahead with the remaining repairs - as I understand it the Insurers would then pay you the VAT on the those remaining repairs - which would get you back to where you could have been originally - but that would mean them also giving you back the £146.00 they are talking about now, because otherwise they haven't paid for the full repair - plus all the VAT.

Or am I wrong?


*EDIT*

I think I am wrong - the Insurers are due to pay claim cost + any relevant VAT - to date they have paid partial claim cost + the relevant VAT on that partial repair AND the remainder of the claim cost which does not attract VAT until you have repairs actually carried out - sorry, OP, I am kinda thinking out loud, I can't see where they are coming from.

Hoonercat

If I went ahead with the rest of the repairs the insurers would meet the cost of the VAT on those repairs only, as they've already met the cost of the first repairs (£146.14).

Maybe I haven't explained it properly:

Estimate of damage was £2168
Insurers tell me that I will receive this amount (minus VAT) regardless of whether I carry out all the repairs. They say they will reimburse any VAT paid after final invoice is sent to them.
They send me a cheque for £1885.47 (estimate minus VAT).
I send them final invoice for £1120.39, £146.14 of which is VAT.
They send me a cheque for £146.14 to cover VAT on work carried out ( If I get the remaining repairs done at a later date, they will reimburse me for the VAT on this.)
Four months later, they tell me they want the VAT back as the payment of £1885.47 was enough to cover both repairs and VAT.

I'm assuming that the insurers are having trouble claiming this £146.14 back from the third party so have decided to try to get it back from me, despite telling me they would cover the payment.

*MF*

Sorry OP - (Memo to self - do NOT think out loud!)

I agree 100% with the position you think is correct - I don't agree with the Insurers asking for the VAT back.

Good luck!