Are Write-Offs (Total Loss Vehicles) Appropriated Lawfully

paddyjoe26

Under law,a policyholder can only benefit from a claim to the extent of the limits of indemnity set out in the policy / contract.For this reason,you cannot receive a total loss payout and retain rights to the residual value of the subject matter of the insurance,in this case your damaged vehicle.Otherwise you are being put in a better position than you would have been had the loss not occurred

This dictum has the ring of credibility, but it doesn’t stack up.
I believe that you have wrongly identified the “subject matter of the insurance”, as being the ‘damaged vehicle’. Clearly the vehicle is only the subject of the indemnity when it is stolen. If it is returned damaged before the total loss payment us completed, the damage then becomes the subject matter. In an accident there is no such object as a ‘damaged vehicle’ in the context of the contracts. We only there is.
What law can enable the insurer to unilaterally take possession of the vehicle, on the assumption that if it is retained by the registered owner, the latter may potentially be enriched?
Why have you not considered the consequential costs of the contracts beyond the settlement pay-out? Such as cancellation of policies without a pro-rata refund; cancelled car hire for the total loss claimants; undervaluation by the engineer of the market value; and an overvaluation by the used car dealer?

InsideInsurance

paddyjoe26 wrote: »

Why have you not considered the consequential costs of the contracts beyond the settlement pay-out? Such as cancellation of policies without a pro-rata refund; cancelled car hire for the total loss claimants; undervaluation by the engineer of the market value; and an overvaluation by the used car dealer?

Those are uninsured losses, policies only cover what they state they do hence why things like a hire car is an optional extra and legal expenses insurance helps you recover your uninsured losses in the case of non-fault accidents from the third party.

Valuation is really a bit of a silly point. Ask a dozen people what a car is worth and you'll probably get more than a dozen answers. There are dispute processes and the FOS can intervene if you believe the assessment of market value is wrong. As to the matter of a company selling secondhand cars for too much, I'd argue thats more the buyer not being good enough at negotiating, but your skill in getting a car at the best price possible is also not an insured item

rs65

paddyjoe26 wrote: »

I believe that you have wrongly identified the “subject matter of the insurance”, as being the ‘damaged vehicle’. Clearly the vehicle is only the subject of the indemnity when it is stolen. If it is returned damaged before the total loss payment us completed, the damage then becomes the subject matter.

You are wrong. Try again.

paddyjoe26 wrote: »

What law can enable the insurer to unilaterally take possession of the vehicle

Why does there have to be a law?

Daniel54

paddyjoe26 wrote: »

What law can enable the insurer to unilaterally take possession of the vehicle ?

I was going to reply at greater length to your various posts following my last,,but will keep this simple and in plain english.

Thankfully,insurance companies are now obliged to write their policies in plain english so the Privilege policy you quoted says what it means.No further interpretation required in respect of the passages you discussed.

In law,an insurance policy of indemnity is a benefit,paid for by your premium.It is a benefit irrespective of whether the claim is a partial loss,a constructive total loss ( which is where you are focussing) or an actual total loss.In each of the cases the policyholder is always the beneficiary but never a creditor.

This is supported by the following definition of an insurance contract :-

"A contract of insurance is one whereby one party (the insurer) undertakes for a consideration to pay money or provide a corresponding benefit to or for the benefit of the other party (the assured) upon the happening of an event which is uncertain, either as to whether it has or will occur at all, or as to the time of its occurrence, where the object of the assured is to provide against loss or to compensate for prejudice caused by the event"

This is quoted from the HMRC section on the Legal and Economic basis of Insurance and you are ,of course,the assured.

http://www.hmrc.gov.uk/manuals/gimanual/gim1000.htm

I would thoroughly recommend that you read these pages as they should help you in your understanding of the legal underpinnings of insurance policies in this country and help you avoid mis-interpretation.

To answer your question quoted above,the Marine Insurance Act 1906 codified into statute law previously established common ( case) law concerning not only matters specific to marine insurance,but also principles governing insurance contracts of indemnity.Article 61 has not been amended by subsequent case or statute law and states

" Effect of constructive total loss.

Where there is a constructive total loss the assured may either treat the loss as a partial loss, or abandon the subject-matter insured to the insurer and treat the loss as if it were an actual total loss."

http://www.legislation.gov.uk/ukpga/Edw7/6/41/section/61

I believe this answers your question

redux

paddyjoe26 wrote: »

Thrugelmir
A dent “spanning both doors” is unlikely to be “invisible”. I was making a point that “total loss” or “write-off” does not necessarily mean mangled mess of metal and pain. I also made the point, at least I believe I did, that insurers generally do not offer a buy back option as a matter of course. You have to insist on it if you want to repair the category C. Some insurers point blank refuse, threatening to withhold a cash settlement without the Category C total loss being handed over.

They may not advertise it as a matter of course, but it is always an option you can ask about.

Furthermore it may be possible to negotiate to be paid in lieu of the repair, without it being recorded as a write-off. One reason to do this is that it may be an insurer which declines to insure write-offs, and if you are keeping the vehicle you want them to continue the insurance.

I can't work out what your complaint actually is. Is it the fee for the salvage, or just the imagined position that some might refuse to sell salvage? Maybe you need to improve your negotiation skills, starting with some homework in advance, not up to 4 years later.

paddyjoe26

InsideInsurance wrote: »

As to the matter of a company selling secondhand cars for too much, I'd argue thats more the buyer not being good enough at negotiating, but your skill in getting a car at the best price possible is also not an insured item

You have a point, but under the provisions of the Unfair Terms in Consumer Contracts Regulations 1999, Regulation 5(1), We are not expected to be able to compete with the expertise of the engineer and the used car dealer.

Lord Bingham, addressing this issue in the house of lords regarding good faith, or fair dealing, had this to say: "Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position, or any other factor..." Essentially, this is providing guidance to the courts.

Regulation 5(1) defines 'unfair term' as: 'a contractual term which has not been individually negotiated shall be regarded as unfair, if, contrary to the requirement of good faith, it causes a significant imbalance in the party's rights and obligations under the contract, to the detriment of the consumer.'

I trust this will broaden the scope of your argument, and that you will assess terms such as "once we settle your claim your car belongs to us", accordingly.

paddyjoe26

The belief that the cash settlement of market value returns the total loss claimant to the same financial position enjoyed pre-accident, is unreliable. Clearly, the cash settlement can do no more than barely cover the direct costs of the replacement vehicle, but this is a simplistic assessment of reimbursement.

There are contracts which refuse to provide a pro-rata refund against the cancelled policy, no matter what, and others which will consider a refund on condition that the replacement vehicle is insured with them. Where there is no refund the lost premiums can be between 0 and 11 months. At a modest £20 per month this amounts to no loss at all, or up to a £220 loss.

A courtesy car for up to 14 days is included in most contracts, but generally withdrawn from a total loss claimant. Some contracts will offer a car hire for a small extra fee, which will include a total loss claim. Where there is no courtesy car for a total loss claimant, the cost is conservatively estimated at 3 days, costing £40 / day or £120 in total.

It is inevitable that the engineer and the used car salesman will either deliberately or unconsciously attempt to cut the best deal for their employers, taking advantage of the inferior knowledge and negotiating skills of the policy holder. At a modest 5% advantage, the cost either way for the policy holder with a £2000 car will be either £100 or £200 in total. Incidentally, is the total loss market value based on the trade price, or the retail price of a replacement?

The basic and permanent risk involves the valuations. Car hire and unrefunded premiums are contractual risks. You can, in the event that the total loss vehicle is retained, deduct from 5% to 10% of £2000 (£100 to £200) salvage value from the potential losses estimated above.

Finally, please do the sums and ask yourself this question: Is the automatic appropriation of total loss vehicles unassailably legitimized, by compelling and rigorous evidence that all total loss claimants are actually returned to their pre-accident financial position by payment of the cash settlement?

dacouch

#Parklife





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rs65

paddyjoe26 wrote: »

Clearly, the cash settlement can do no more than barely cover the direct costs of the replacement vehicle, but this is a simplistic assessment of reimbursement.

The cash settlement is intended to cover the direct costs of replacement, at retail value, of the car. It is called car insurance for a reason.

You are seeking some form of consequential loss insurance which isn't available - therefore trying to use some strange logic to squeeze more out of claim to reimburse your uninsured losses.

paddyjoe26

redux wrote: »

I can't work out what your complaint actually is. Is it the fee for the salvage, or just the imagined position that some might refuse to sell salvage?

I am not sure if you are drawing on your own experience or whether you are merely repeating the sanitized insurance narrative, spun by the insurers. For instance, the insurance industry will say that (evidence to the CMA Inquiry into Industries competitiveness):
a) If a vehicle is written off, a policy holder can elect to retain the vehicle or give it up to the insurer.
b) If the policyholder gives up the vehicle, they will receive a payment of the perceived market value pre-accident.
c) If the policy holder elects to retain the total loss vehicle, they will receive a payment of the pre-accident market value less the estimated value of the salvage.

In practice, options a) and c) are not in my experience on offer, or for the other total loss policy holders with whom i have discussed this issue. The ABI in a letter made it perfectly clear what the industry's intentions are: "the Salvage Code assumes that insurers will use their best endeavours to take control of the vehicle salvage and many insurers will have this written into their policy documents, although the wording may vary". Furthermore, an insurer informed me in writing that: "We are not under any obligation to allow you to retain the vehicle under the contract of insurance you have taken out...", even though this is not expressed in the contract.

Despite the Salvage Code aka The Code of Practice for the Disposal of Motor Vehicle Salvage, not being a legally binding document on the policyholder, the vast majority of the industry have voluntarily signed up to the Code which provides that categories A and B total loss vehicles "should always be scrapped and never returned to the road for safety reasons". Repairable category C is more accessible for a 'buy back' but it is not promoted as an option and requests are not automatically approved. Clearly then I emphatically refute what you call an "imagined position that some might refuse to sell salvage".

As to the "fee for the salvage", it is not the amount which is of concern (5% to 10% of market value). but the legitimacy of the assumed transfer of ownership to the insurer in the first instance.