Car Insurance Company Scrapped Car Before Settlement

hayyana

Hi all,

Help would be appreciated. My car was written off not long ago. The damage was due to my fault but was very minor, with scratches to the rear bumber and wing, as well as a dent in the rear door.

As the car is 10 years old, the insurance company straight away decided to write off the car and offered me its current value. While we were negotiating the offer, I requested to purchase the car back as I felt I could make more money out of it by scrapping myself and then putting the money towards another car.

I was informed that I would be given this option. Once all was done and I accepted the settlement offer, I asked regarding purchasing my car back, and was astonished to learn that it had already been scrapped!

I was obviously astonished as I thought they weren't permitted to scarp until settlement was complete.

Can anyone help with advice as to whether this was OK for them to do? Are they allowed to do that?

Regards
Hayyan

dacouch

From the Ombudsman

16. salvage of the "written-off" vehicle and contents

Once the policyholder accepts payment of the full market value, the insurer becomes the owner of the salvage. If the policyholder asks to keep the salvage, the insurer is entitled to deduct what it would have been able to sell the salvage for. This is usually not very much.

But what if the policyholder complains that the insurer (or its agent) disposed of the salvage before paying the full market-value? At this stage, the vehicle still belongs to the policyholder, and we take the view that the insurer should not have disposed of it without first obtaining the policyholder’s consent to the settlement of the claim – even if the insurer said it was only acting in the public interest by keeping a badly-damaged vehicle off the roads. In such circumstances, and unless the insurer returns the salvage, we usually award the policyholder compensation for inconvenience.

If the policyholder had personal belongings in the vehicle when the insurer disposed of it without consent, we are likely to award the cost of replacing these – usually on a like-for-like (rather than a new-for-old) basis.

http://www.financial-ombudsman.org.uk/publications/technical_notes/motor-valuation.html#13

hayyana

Thank you so much for the response. I called the financial ombudsman and they also confirmed what you have just written. They said they'll chase this up as they shouldn't have disposed the vehicle.

Thanks again!