Engineer's Total Loss / Write Off Valuation Lowered by Insurer

OshayAway

I've had experience in negotiating total loss valuation up from the insurance company's offer for myself and family members over the years but this is a new problem I've not come across before...

A friend of mine wrote her car off a couple of weeks ago. The vehicle was collected and assessed by an company who were instructed by the insurer and assesed by their engineer. My friend then received a phone call from this company stating that the vehicle was not economical for repair and as a result it would be written off as a total loss. They explained that the current market value for the car based on pre-accident condition was £2,668.

As the only car in the household, they couldn't afford to be without transport for long and purchased a replacement car for £2,800 on Friday. The subsequently received a phone call from the insurer stating that the car was written off and that they have valued it at £2,100.

My first thought is that this is hardly 'treating customers fairly' as they have acted in good faith and would not have purchased that vehicle if they had not received a valuation over the phone. There was no explanation to the effect of "you may get less" etc when they received the phone call from the engineer.

My guess is that there may be reasons given by the insurer as to why they have valued the car at £2,100 but I'm inclined to think that this isn't really the issue, rather the issue is that they were given a clear and specific valuation over the phone from someone representing the insurer.

I appreciate that some may have an opinion on this and say something to the effect that it isn't wise to spend the money before it's received or that it's not the engineer who have to pay out so their valuation shouldn't be relied upon. Anything like that isn't particularly helpful at this stage. However, I would be interested to know if anyone has had any similar experience and / or could suggest the best way to handle matters to get this resolved.

Thanks in advance.

BertTheRaccoon

I have seen first hand experience of when an insurer will get the report in from an independent engineer they have instructed, which states a particular valuation (taking into account all the usual perameters of age, mileage, condition etc), only for the insurer to then offer a lower amount.

So it sounds like the engineers have told your friend what the "market value" of the car is in their opinion, but the insurer has decided to offer a different amount.

So this would be worth disputing with them, which will involve supplying them with evidence as to what other identical model and spec cars are making out there in the marketplace.

Don't forget that there will be a policy excess to be deducted from the pre-accident value and also any outstanding premiums (if they were paying by monthly instalments) so this could be the reason for the settlement figure diminishing. Check that before going into battle.

The engineer would not have had any idea as to the excess amount or the position with any premiums still owed, his job was to value the car.

InsideInsurance

Not fishing for more clients? That makes a change!

To the OP - they evidently need to speak to the insurer to find out why there is a difference between the valuation given by the engineer and the settlement offer by the insurer.

The £2.6k is going to have been the valuation, is £2.1k possibly net of the excess? What is the excess? Did they possibly put a low declared value on the vehicle?

Ultimately if they dont agree with the offer and dont accept the insurers explanation then they need to register a formal complaint with the engineers valuation being one of the grounds for disputing the settlement offer. If they can supplement this with ads from autotrader etc then this all helps their case

OshayAway

Lee_Jones wrote: »

I have seen first hand experience of when an insurer will get the report in from an independent engineer they have instructed, which states a particular valuation (taking into account all the usual perameters of age, mileage, condition etc), only for the insurer to then offer a lower amount.

So it sounds like the engineers have told your friend what the "market value" of the car is in their opinion, but the insurer has decided to offer a different amount.

So this would be worth disputing with them, which will involve supplying them with evidence as to what other identical model and spec cars are making out there in the marketplace.

Don't forget that there will be a policy excess to be deducted from the pre-accident value and also any outstanding premiums (if they were paying by monthly instalments) so this could be the reason for the settlement figure diminishing. Check that before going into battle.

The engineer would not have had any idea as to the excess amount or the position with any premiums still owed, his job was to value the car.

Thanks Lee, that's interesting. The excess is £150 and is in addition (or more accurately subtraction) to the £2,100 offered. Premium wise, they do pay monthly and have already swapped the insurance to cover the new car, so my guess is that this has all been accounted for.

I understand what you are saying about arguing over the lower valuation. Indeed, the insurer has welcomed my friend to send evidence of similar car for sale but I still think that it is simpler and fairer to argue that they were given a specific and precise valuation which they acted on in good faith.

OshayAway

InsideInsurance wrote: »

Not fishing for more clients? That makes a change!

To the OP - they evidently need to speak to the insurer to find out why there is a difference between the valuation given by the engineer and the settlement offer by the insurer.

The £2.6k is going to have been the valuation, is £2.1k possibly net of the excess? What is the excess? Did they possibly put a low declared value on the vehicle?

Ultimately if they dont agree with the offer and dont accept the insurers explanation then they need to register a formal complaint with the engineers valuation being one of the grounds for disputing the settlement offer. If they can supplement this with ads from autotrader etc then this all helps their case

Hi InsideInsurance, I was hoping you'd comment!

No, I should have explained about the excess, it's £150 so not that. They were told the £150 would come off the £2,100.

Good shout about the declared value, I should have thought of that. How much influence does that have on claim though?

In your opinion, if they centre their complaint on the fact that they were given a valuation rather than that the revised valuation was too low, do you think that would be a wise approach?

OshayAway

Just found out that the declared value was put down as £3,000

BertTheRaccoon

Declared value will have no bearing on a claim (unless you attempted to claim for an amount in excess of the insured value) on a standard policy.

Insurers don't take a blind bit of notice on that aspect.

InsideInsurance

Most insurers only use declared value for the purposes of triggering a few terms (eg if you can have TPFT/ TPO or not and if you need a tracker or not) but a few will max out any settlement based on the declared value - that isnt to say that you will get the declared value if they have a total loss.

The key element is to find out why the insurers have offered less than what the independent engineer said was the value - and to ensure the end report did say what the engineer said over the phone.

Check the policy wording, if it states "market value" as most policies do, they will struggle to justify to the FOS why they who havent seen the vehicle think the market value is very notably less than an independent engineer who has seen the vehicle thinks - though again that depends on the rationalisation to the difference by the insurer.

It wouldnt be the first time I have seen an engineer make a mistake in their valuations - eg pricing based on the Turbo version when its the non-turbo or up lifting the value for optional extras but those werent declared as modifications on the policy etc

OshayAway

Good to know, thanks. Would they be entitled to see / obtain a copy of the report?

BertTheRaccoon

Doubtful there would be an entitlement to see the report commissioned by their insurers, they would just claim it is privileged, although it would be a document required of disclosure if the claim became the subject of litigation.

I would say at the moment that the fact the author of the report has told your friend openly on the phone the valuation they gave the vehicle, this needs to be hammered home to the insurer in question, namely you know the valuation the engineer has give of the "market value" of the vehicle, that is the value they should be indemnifying your friend to (less the deductables).

Knowing insurers and how they behave though, I would also get printing off adverts from autotrader, ebay etc of as near identical vehicles to demonstrate the "market value".

mikey72

The FOS are clear on valuations
The forecourt price, based on
" valuations given in motor-trade guides, such as Parker, Glass and CAP."

They don't normally look at ads and similar.


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