Insurer will not pay for cycle - advice please

GipsyRacer

Three weeks ago, my son (15) was run over by a motorist, who admitted liability to his insurer. Fortunately, my lad will recover, but his bike will not.

The insurer, Churchill, insisted that we get a bike shop to prepare a damage report and quotation for the bike and clothing, helmet, accessories, etc., which were damaged in the incident, in our own time and expense. Their report confirmed that the bike is a write-off and quoted £4996.99 (it was quite a fancy bike). Churchill made an offer £3479.96, about £1500 less than the replacement cost of the goods, citing "betterment" as the reason for depreciating the bike, which was a little over 1 year old, and omitting some of the items claimed for. I did not accept their offer, as my son won't be able to replace his bike and equipment with the amount offered, unless he accepts a much lower specification. As he was not at fault in any way, I don't see why he should accept this. I've written to them to explain why.

I raised a complaint, but Churchill, their own judge and jury, decided that they had followed the correct process and closed the case without right of appeal and will not discuss the matter further.

If I try to talk to the claims fulfillment department (after a very long time on hold), they refuse to discuss because it is in the hands of the customer service people.

I don't think the Onbudsman service will be able to help, as my son has no insurance of his own and is not a client of Churchill.

The car driver (who hasn't even said sorry) is not responding to calls or texts.

I've emailed Churchill's press office, but no response so far.

I'm not at all keen on engaging ambulance-chasing lawyers.

Suggestions gratefully received.

P.S. If you are insured with DirectLine (Churchill), I recommend choosing a different provider next year. They treat claimants with contempt.

Birseh_

what that means is that the insurer has to return your son to the position he was in before. Tell them to replace the bike to your satisfaction (no funny business) and that will put them in a bind. Can you DM the text in the policy?

tempus_fugit

They don't have to provide your son with enough to replace everything as the value of the claim, as they have informed you, is based upon the value of the items at the time of their loss or damage. Betterment is a normal deduction to be made in this sort of claim. The deduction seems high for a bike of one year of age but I'm not sure of the depreciation of bikes, especially of that kind of value.

Did they say why some of the claimed Items were excluded?

If you can't come to agreement then the last resort is to to take them to court.

BTW, the third party doesn't need to respond to you as they have handed the matter over to their insurers who are handling it on his behalf.

Birseh_

https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/insurer-reject-betterment-expert-opinion-needed

It's so you can't make a profit or claim as a mechanism to better what you have with a moral hazard. You can go to the Financial Ombudsman. 

tempus_fugit

Birseh_ said:

what that means is that the insurer has to return your son to the position he was in before. Tell them to replace the bike to your satisfaction (no funny business) and that will put them in a bind. Can you DM the text in the policy?

In this case though, returning him to the same position as before means the second hand value of the bike, not to replace as new.

Birseh_

True but GR said he could not get back to his original position "as my son won't be able to replace his bike and equipment with the amount offered, unless he accepts a much lower specification"

Aretnap

If Churchill are the driver's insurer then their liability is restricted to the second hand value of the bike. Obviously this will be lower than the price of an equivalent new bike. It's not a case of Chirchill/Direct Line being uniquely horrible; this is a basic principle of liability law and would be the same regardless of who the insurer was.

You're correct that the Financial Ombudsman will be no help as you are not a customer of Churchill. Ultimately if you can't agree a settlement with them, the only way if forcing the issue is to take the matter to court. However a court isn't going to award you the value of an equivalent new bike either. You can argue about exactly what the fair second hand value of the bike is, but you can't get away from the fact that it's the second hand value that's relevant, not the new price. 

An ambulance chaser will be of little use unless your son is claiming for personal injury as well, as the amount of the claim is below the small claims limit for property damage (£10K), so you would not be able to claim lawyer's fees even if you won. The expectation in claims of that size is that the parties represent themselves.

Ultimately the solution is to insure expensive bikes yourself with a policy that provides new for old cover - either by adding them to your home insurance, or with a dedicated bicycle policy. Unfortunately it sounds like it's too late for that.  

Sorry not to be more help, however if your expectation is that the driver's insurer pay for like for like new replacement, I'm afraid there's no way around the fact that you'll be disappointed. 

Aretnap

Birseh_ said:

what that means is that the insurer has to return your son to the position he was in before. Tell them to replace the bike to your satisfaction (no funny business) and that will put them in a bind. Can you DM the text in the policy?

Birseh_ said:

https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/insurer-reject-betterment-expert-opinion-needed

It's so you can't make a profit or claim as a mechanism to better what you have with a moral hazard. You can go to the Financial Ombudsman. 

The OP is talking about claiming from the third party's insurer so (1) he can't go to the Ombudsman (2) the terms of the policy are irrelevant - his rights are determined by tort law, not by contract law or consumer law and (3) the insurer's responsibility is purely financial - they owe him the second hand value of the bike, not an actual second hand replacement still less a new replacement which is what I read his expectation as. 

Birseh_

I will adress 1 and 2 in a longer email.

But the insurer has to replace the replacement value which is what we are talking about here. It could be lower (or even higher in some cases) but the replacement value is a number and he has to argue the replacement value which returns him to a bike of very similar like. That's the insurer's obligation and his own objective. The OP said his son could not get back to his original position i.e. replace his bike and if he can't do that then the insurer's offer is wrong. He should go and try and buy a bike with one years wear and tear and that's the value he needs.

GipsyRacer

Thanks all for your input.  My expectation, which I think is reasonable, is that the insurer puts my son in the position he was before he was run over.  Given that his bike was just a year old, that means an equivalent new replacement.  Why should he (or I) waste time and money chasing around for a second-hand bike, which may turn out to be a dud?  (He uses his bike for some pretty extreme downhill racing).

Aretnap seems to be pretty clued up and is reading from the same script as the Churchill folks. Uncomfortable and maybe correct, but it doesn't make it morally right.

I wonder if it is worth pursuing the motorist?  He may have tried to discharge his liability through his insurer, but in my view this is not enough. And like I said, he is a scum bag.

I am not one for giving up on a matter of principle.

Birseh_

Exactly.....I will respond on the Ombudsman issue. Insurance companies (and their staff) say all sorts of things. I had one last year when a well known journalist who has a consumer champion column said that AXA weren't paying £80,000. I told her to quote one section of the Insurance Act relating to 'unrelated to a claim' and they paid £80k the very next day. Insurers and their staff say all sorts of things. Much of it rubbish.