Insurer will not pay for cycle - advice please

Aretnap

GipsyRacer said:

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).

I understand why you'd feel that, but unfortunately it's not how the law works. The compensation due is the amount of money the bike would have sold for immediately before the accident. The principle is exactly the same as if someone writes off your 15 year old Ford Fiesta which is one MOT away from the scrapheap - you don't get it replaced with a brand shiny new Fiesta. Depreciation on a one year old bike will obviously be less dramatic than on a 15 year old car, but there will be some depreciation, and the principle is no different. 

GipsyRacer said:

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.

If the driver is liable then the insurer is liable. There are no circumstances (short of a driver being uninsured) in which you can claim from a driver but not from his insurance company. 

OTOH if you can't come to an agreement with the insurance company and want to take things further the procedure is: (1) you issue a court claim against the driver (who is ultimately the one who damaged the bike) (2) he hands the claim on to his insurers and (3) his insurer represents him in court and pays anything he is ordered to pay (which will be the second hand value of the bike, or the court's best estimate of it).

So in a narrow sense it might be worth pursuing the driver, but it doesn't entitle you to more than you would be entitled to from the insurer. 

The driver being a scumbag doesn't change anything; the compensation is the same whether he's a scumbag or the nicest person in the world. 

Aretnap

Birseh_ said:

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.

Indeed, but the OP wants an equivalent new bike, not one with a year's wear and tear, which is not a realistic aim.

Another common myth is that he's entitled to end the process with an actual replacement bike rather than a sum of money. This isn't quite true - the insurer's responsibility is to make good his financial loss, which means to compensate him for the loss in value the bike has suffered - not to replace the bike with an identical one. An identical bike might not currently be for sale or might not even exist. If the OP can' t find a satisfactory one year old bike of the same model for sale it wouldn't mean he was entitled to the price of a slightly newer one, or the next model up etc. 

OTOH if he can find examples of similar one year old bikes selling for significantly more than the insurer's offer, that could be evidence that the insurer's offer is too low, subject to the caveat that the insurer will inevitably argue that advertised prices are ot the same as selling prices. 

wongataa

OP, get your son to join Cycling UK or British Cycling so they have access to free legal help if this type of situation happens again.

Petriix

An identical bike might not currently be for sale or might not even exist. If the OP can' t find a satisfactory one year old bike of the same model for sale it wouldn't mean he was entitled to the price of a slightly newer one, or the next model up etc. 

Yes it would. If something is rare and irreplaceable then it increases its value accordingly.

You can't expect the price of a new bike, but you can expect the payout to cover the cost of replacing it with an equivalent second hand model with the same specification. If you cannot find an exact match then the closest example with slightly better spec would be reasonable.

Churchill will offer what they think they can get away with. You can either accept that or take them to court. If the judge awards more than their offer then they also have to pay your legal fees but, if the award is the same or lower, your legal fees are not covered.

I would go back to Churchill with some evidence of the actual cost of replacement (with second hand prices) and threaten court action if they are unreasonable. Assuming that they have genuinely offered lower than the true replacement cost, they are likely to increase their offer.

mgfvvc

GipsyRacer said:

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.

Legally you can only pursue the motorist. The insurer acts on the motorist's behalf but legally the liability is on the motorist. The insurer has a contract which requires them to meet the motorist's liability, but they are not liable to you, at least in the sense that you can't sue them for any liability separate to that of the motorist.

user1977

GipsyRacer said:

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.

Your son already is pursuing the motorist. The motorist's insurer is dealing with that claim on their insured's behalf. That's how it works. Otherwise what would be the point of insurance, if claimants were entitled to bypass the insurers? 

Grumpy_chap

GipsyRacer said:

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.

GipsyRacer said:

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.

I am glad that your son is not injured.
Does your son have insurance on the bike?  Many riders with bikes at this level of professionalism and value do.
If he does not have insurance, perhaps he should consider it for the future.

You are correct that the insurer should put your son into the position he was before the incident.  That is discharged by the making good in financial terms to the value of the loss. 
The loss was a >1 yo bike so the maximum value of the loss is the value of a >1 yo bike, not a brand new bike (as that would, indeed, be betterment as the insurer has said).
Once you have received the financial value of the >1 yo bike, it is your son's choice what he then does with that money.  He can choose to buy a replacement bike second-hand.  He can choose to add more money and buy a replacement bike brand new.  He can choose to buy a lower-specification bike brand new.  Or he can do something entirely different.

You can seek to negotiate the value with the insurer.

You may also be able to mitigate the loss - if the bike shop has simply priced up a complete new package the same when they sold the bike brand new, can that be reduced by re-using any of the accessories? 
You say the replacement quote was for "bike and clothing, helmet, accessories, etc."
The bike itself may be totally beyond repair, and the general advice from safety professionals is that a helmet once impacted is to be replaced (it has done it's job).
Clothing, however, may not be immediately binned because of the accident and, even if it is, the second-hand value of >1yo cycle clothing is practically zero.
Can any of the other accessories be reused?  I can see a situation where the bike frame was bent but the lights are fine, just as an example.
Will there be any savings on this type of bike plus accessories once the New Year sales start?

You already are pursuing the motorist who has elected to have the resulting costs satisfied by the insurer.  You cannot pursue the motorist in addition (that would be pursuing the individual twice).  Having delegated the process to the insurer, it is probably quite correct that the motorist does not engage directly but will simply forward any communications to the insurer to respond.

Your complaint to Churchill will fall on deaf ears to a large extent as you are not their customer - all you can reasonably do is seek to negotiate on the value of the bike at >1 yo against the value they have offered.  

You say you don't agree this is morally right, nor do you want to give up on principal. 
BUT what is the principal you think you are upholding?  
Do you think the insurer should pay for a brand new bike to replace the used bike?
Would you accept the increase to all insurance policies such a basis would imply?  

Consider this in some other scenarios:

 - If you rented a flat and your visitor dropped a cigarette causing damage to the 6 yo carpet, which then requires replacement.  The expected life of the carpet is 10 years.  Would you gladly reimburse the landlord for the full cost of a replacement carpet, or would you only agree to pay the cost less 60% wear prior to the event?

 - If your son is riding his bike and collides (his fault) with a 20-yo Focus, so the dent in the wing plus scratches means the car is beyond economical repair, would you feel it appropriate that your son (or his insurance) covers the full cost of a brand new replacement Focus?

 - If a car collides with a garden fence, is the driver's liability to repair the section of fence at the front of the house, or the full boundary fence right around the side and rear of the house also?  The homeowner may be displeased that the fences are now visibly different if only the front section is repaired.  That does not increase the driver's liability.

The concept of betterment is a real parameter for the insurer to take into account and applies across all sorts of claims.

I know you (your son) is aggrieved at this situation, but I don't think the insurer (car driver) is liable for any more than the replacement value to compensate for the loss of the second hand bike.  It is entirely reasonable to negotiate on what the value of a second hand bike should be. 

Your are derogatory about the character of the driver but, given that the driver has admitted liability and allowing his insurer to settle the claim, that negative assertion may be unfounded.

If you still feel that you have a case, it may be worth checking whether this can be covered by your home legal insurance.

As I started, it is good that your son was un-injured and good luck in reaching a resolution that works.

GipsyRacer

Thanks all for your input.  I have concluded that the only viable route open is to accept Churchill's offer, even though it does not cover the loss satisfactorily.

As to the question of whether or not the motorist is a scumbag, the facts are that he was driving too fast for the conditions. When he ran over my son, he didn't apologise at the scene, has not had the decency to ask how he is afterwards and drove over the bike again as he left the scene of the incident.

So just in case anyone in a similar situation to me is reading this in the future, here are the learnings:-

1) I'll be taking out new for old and legal expenses cover on the replacement bike, on behalf of my son.

2) I will never, ever place any business with Churchill or DirectLine Group. At every opportunity I will point out to as many people as I can how poor their service is.

Grumpy_chap

GipsyRacer said:

Thanks all for your input.  I have concluded that the only viable route open is to accept Churchill's offer, even though it does not cover the loss satisfactorily.

You can try to negotiate that offer upwards.  

Ultimately, covering the financial loss of a second hand bike is the legal route to compensation to return the individual to the same condition as they were prior to the incident.

Birseh_

Aretnap is correct - good advice Aretnap

Called the FOS and they say you have to be a customer of the company you are claiming against. Maybe small claims court?