Car write-off settlement advice?

AnnaJJ

Hello! Just looking for a bit of advice from folks who know the ins and outs...

Over Xmas I was at a red light, with my 9yr old in the back, when a car ran into the back of us. Not super fast (air bags didn't go off), but hard enough to cause damage.

The other party admitted fault, it's all been relatively smooth with their insurer (am also having some physio through them, because...ouch). They finally picked up the car to assess last week, and I heard yesterday that they consider it beyond economical repair, and they're offering a settlement to write it off.

It's a 2010 Honda Jazz that I bought in Jan 2021 for £5k (part exchange knocked it down to £4.3). Just under 65k miles, manual. It is missing a cover for one of the wing mirrors, and has a very minor scratch down one door that didn't bother me enough to deal with.

They've offered me £3704. I know it's not a perfect yardstick, but similar cars on Autotrader seem to be around £4.5k+, though perhaps there's stuff in the specs that I don't understand (cars really aren't my specialist subject). Does the settlement figure seem fair..? I'm not sure how this process works and if I should be sceptical of the offer. I'm also unsure if this initial figure is subject to change - I get the impression it's been robo-assessed at this stage.

Thanks in advance for any advice, it's much appreciated!

[Deleted User]

You could try offering the ones in Autotrader what their insurance is offering. If they won't come down you can go back to their insurance with evidence.

Goudy

The insurance company will base the value of your car on industry standard price guides.
Guides like Glass's and Cap HPi monitor cars values and they get uprated regularly.

Generally these prices have a few bands for each make, model, trim, mileage etc.
Trade price.
Private sale price
Dealer price.

Your car will be "worth" something within that but the insurance company will usually ignore the dealer price as that has the dealers mark up, often around 20% above trade.

This kind of works out with what you have written.
Dealer cars are screen priced at around £4500 but they are marked up at around 20% (£900), so the trade value is around £3600. I would say they have offered you around trade price.


You can go back to the insurance company and try and explain that your car was perhaps worth more.
Part of that might be evidence of other, similar cars for sale, but remember they are either dealer screen prices or prices of what a private seller wants, but doesn't neccessarily gets for their car but you understand what they have already offered you is around trade price, so it might be worth mentioning you aren't trade so can't really buy at that.

Condition might be another point to make.
Can you supply a copy of a full service history?
Evidence or some recent maintenance, like tyres, exhaust etc. Something to back up a claim that you have recently invested in the car for future use.
It's also worth remembering they will likely have a condition report from an engineer, so won't be far off really knowing it's pre accident condtion, so don't go over board!

There's nothing stopping you trying to get them to increase their offer without the above, but it does help.
It also helps to be pleasant with whoever you car dealing with and you need to be dealing with the right person that can make that offer, don't waste time on anyone that answers the phone or leave messages, you want to talk to the organ grinder!

Used car prices naturally decrease each month and used car prices have been unusually high until recently, the market is returning to something like normal pretty quickly, so strike as soon as you can.

DullGreyGuy

AnnaJJ said:

It's a 2010 Honda Jazz that I bought in Jan 2021 for £5k (part exchange knocked it down to £4.3). Just under 65k miles, manual. It is missing a cover for one of the wing mirrors, and has a very minor scratch down one door that didn't bother me enough to deal with.

They've offered me £3704. I know it's not a perfect yardstick, but similar cars on Autotrader seem to be around £4.5k+, though perhaps there's stuff in the specs that I don't understand (cars really aren't my specialist subject). Does the settlement figure seem fair..? I'm not sure how this process works and if I should be sceptical of the offer. I'm also unsure if this initial figure is subject to change - I get the impression it's been robo-assessed at this stage.

Thanks in advance for any advice, it's much appreciated!

Are you claiming from your insurance or the third party insurer? The mention of physio suggests its their insurance?

Looking in autotrader will give you advertised prices not sale prices; you could stick your car on there tomorrow with all its damage and ask for £10,000 if you wanted.  What you need to look at is sale prices and insurers do this by using the Motor Industry standard guides like Glasses, CAP, Parkers etc who update their prices (weekly I think now for the first two) based on real sales data provided to them. 

The ones being advertised for £4.5k... do they have issues like wing mirror covers missing or are they in average nick for their age? If you knock off the loading in advertisements and knock off monies for the pre-accident issues with yours you arent going to be too far off £3,700.

If you are claiming off your own insurance you ultimately have Financial Ombudsman rights and so you may as well complain that the offer is too low and they may bump it up a little. If you are claiming from the third party then you have no FO rights and the insurer can decide to play a little more hardball if they want... I have seen appeals result in lower settlements being offered.

tripled

The insurer should put you back in the position you would have been in had their customer not crashed into you. There's no entitlement to betterment though, so if your car was a bit scraggy, had faults, etc., that would be taken into consideration.

What you paid for it in 2021 isn't really relevant. If cars of a similar spec, condition, mileage, etc. are being advertised from £4.5k up, then they should be offering you something close to that and you should push for it. If the cars being advertised are in better nick then you should expect a bit less. I would suggest broadening your search though to sellers that aren't on AutoTrader. For example a quick search and I found 3 x Honda Jazz, 2010, <70k miles for around £4k.

If you can't come to an agreement, you could refuse their offer. You could then replace the car yourself and take them to the small claims court if they didn't pay up for the actual cost of a replacement. You would need to keep evidence (such as ads) to demonstrate that what you paid was fair market value for a similar condition replacement.

Flight3287462

The other damage you have described could be in the ball park of £300-£500.  So you need to take that into consideration.

Gather your facts, and mention your damage and argue for something in the region of £4,000-£4,500.  I think they will shift a little especially if they think you are being realistic and not taking the mick.

Aretnap

Goudy said:

The insurance company will base the value of your car on industry standard price guides.
Guides like Glass's and Cap HPi monitor cars values and they get uprated regularly.

Generally these prices have a few bands for each make, model, trim, mileage etc.
Trade price.
Private sale price
Dealer price.

Your car will be "worth" something within that but the insurance company will usually ignore the dealer price as that has the dealers mark up, often around 20% above trade.

This kind of works out with what you have written.
Dealer cars are screen priced at around £4500 but they are marked up at around 20% (£900), so the trade value is around £3600. I would say they have offered you around trade price.

If you are claiming from your own insurance company then they definitely will (or should) be using the dealer price, not the trade price or private sale price. The Financial Ombudsman had always been clear they they consider the market value to be what the car would sell for at a reputable dealer, ie what the customer would actually pay to replace the car.

(That said the guides record sale prices which are not necessarily the same as advertised prices. They will also be national prices - if you live in the South East and are only looking locally, the guides and the insurer won't take into account the fact that everything is a bit more expensive than it would be in Middlesbrough).

If you're claiming from the third party insurer things are a little less clear cut. The Financial Ombudsman's policy is not binding on a third party insurer and under tort law they only have to compensate you for your financial loss, which arguably is the price you could have got by selling the car yourself (ie the private sale price). I'm not aware of any case law which clarifies whether the dealer price or the private sale price should be used to assess the value.

jimjames

If the accident happened in December and they only looked at car now does that mean you've been driving it for the last 2 months? If the damage is that light to allow it to drive then it might be worth getting the car back from the insurance as well as the settlement money so you can either fix or carry on using.

Goudy said:

Used car prices naturally decrease each month and used car prices have been unusually high until recently, the market is returning to something like normal pretty quickly, so strike as soon as you can.

Not sure if that was a typo and meant to say "normally decrease". Since Covid second hand prices have been higher, in some case substantially higher than before.

AnnaJJ

Thanks so much everyone!

To answer a couple of questions:

• Yes, claiming on their insurance, not mine.
• Car was MOT'd and had a full service about 2 weeks before the accident.
• Full service history, mix of Honda and Halfords. I bought it from a Honda garage.

It sounds like it's not too bad an offer, on balance. But given that I'm not going to find an identical car with identical wear & tear, realistically replacing the car will cost me £4k+ if I can match make/model/year/mileage etc.

Is it worth me trying to get a few hundred more to try and bridge that gap? Actually finding a car is going to be a massive hassle (single parent, now no car to actually get to showrooms etc, public transport not great here - I know none of that will matter to the insurance company, it's more in terms of the impact of being forced to do this when I wasn't planning to replace the car any time soon).

What would you good folks do in my shoes..?

Thank you again!

AnnaJJ

jimjames said:

If the accident happened in December and they only looked at car now does that mean you've been driving it for the last 2 months? If the damage is that light to allow it to drive then it might be worth getting the car back from the insurance as well as the settlement money so you can either fix or carry on using.

Goudy said:

Used car prices naturally decrease each month and used car prices have been unusually high until recently, the market is returning to something like normal pretty quickly, so strike as soon as you can.

Not sure if that was a typo and meant to say "normally decrease". Since Covid second hand prices have been higher, in some case substantially higher than before.

No, I haven't been driving it. To a lay person like me, the thing was running fine, but the boot wouldn't always lock properly, and the impact gouged a whole in the rear bumper so there was metal sticking out (which made it a hazard, especially as I live in an area with a lot of kids...the thought of one of them stumbling against it...eek). And I think it kind of knocked the back out of alignment somehow, so I'm assuming that aside from the cost of replacing the bumper etc, something more significant may have been shunted internally?

Anyway there's a shortage of courtesy cars, but they sorted me out a hire car while I was waiting the few weeks for the garage to have availability to collect and assess the car.

The insurance company has on the whole been smooth to deal with, and I haven't been put out too much (aside from my neck and back being a bit mashed, but the physio will hopefully help with that).

DullGreyGuy

AnnaJJ said:
Is it worth me trying to get a few hundred more to try and bridge that gap? Actually finding a car is going to be a massive hassle (single parent, now no car to actually get to showrooms etc, public transport not great here - I know none of that will matter to the insurance company, it's more in terms of the impact of being forced to do this when I wasn't planning to replace the car any time soon).

What would you good folks do in my shoes..?

Presumably the car is drivable? Would you live with the damage like you did the other defects?

You can ask to retain the salvage which means you're settlement would be reduced by what they'd get from their salvage agent but it gives you cash and the car... you could use the cash for a cheap repair or trade the car in at your own leisure and use the cash on top to get something else. Trade in for a running car with damage is likely to be higher than the scrap value the insurer will deduct.