car insurance and write off values - interested to hear of experience with the FOS

born_again

TELLIT01 said:

Motor insurance should be based on the replacement cost of a similar vehicle, not the trade in value.

https://www.activate-group.com/news-insights/how-insurers-calculate-write-off/

But just where is that £10K value arrived at? 
You can't use advertised prices on such as like Autotrader, as everyone over prices their car value.
Auction houses, maybe based on CAP values.

Location is a interesting factor. You will pay more in London or SE or some area's of Scotland then you will pay in Bradford area or Scunthrope area for the same car.

waswwa

my issue is - how do they justify mkt value (they didnt the first two times or the final time!) - then used 3 cars of which one was already sold  (and increased the excess without explaining why!)  my research on autotrader is that the market at identical (ie same yr similar mileage) is almost non existent (like 1 car at best anywhere in the country -for example on one day, there is 1 car in NI - am i expected to review a car in NI? when I am in Worcestershire ?)  at the slightly newer car similar (up to 33% more) mileage the mkt is volatile  cars still sell quickly and autotrade should be a good price guide?-  scarsity doesnt mean discount? you only discount something if there are tons of other options or you are desperate to get rid of it

MyRealNameToo

born_again said:

TELLIT01 said:

Motor insurance should be based on the replacement cost of a similar vehicle, not the trade in value.

https://www.activate-group.com/news-insights/how-insurers-calculate-write-off/

But just where is that £10K value arrived at? 
You can't use advertised prices on such as like Autotrader, as everyone over prices their car value.
Auction houses, maybe based on CAP values.

Location is a interesting factor. You will pay more in London or SE or some area's of Scotland then you will pay in Bradford area or Scunthrope area for the same car.

Its bought from the likes of CAP, Glass, Parkers etc... they get the details of thousands of sales of vehicles and build the guides so that motor traders know what to pay for a car they are buying or trying to sell, so insurers know how much a car is worth when writing it off, they also do projections so PCP providers can predict the residual value etc. 

The reverse is also true, try and sell a car in central London that doesnt pass ULEZ requirements will be worth much less than selling it to people far from such emissions targets. 

Havent used any of the guides for a good few years but believe you get a UK value rather than a London value. 

Its probably easier to just read how the Ombudsman says it expects insurers to deal with it https://www.financial-ombudsman.org.uk/businesses/complaints-deal/insurance/motor-insurance/vehicle-valuations-write-offs than an accident management company who may well have a vested interest 

MyRealNameToo

TELLIT01 said:

I never said anything about location, or suggest that the insurer should have to source the vehicle.  Nor did I say it should be identical in all aspects.  Same make and model, although different spec would certainly give a fairer guide to replacement cost than the trade in value.

And no one had said anything about it being trade in value but didnt stop you bringing it up. 

eskbanker

waswwa said:

my issue is - how do they justify mkt value (they didnt the first two times or the final time!) - then used 3 cars of which one was already sold  (and increased the excess without explaining why!)  my research on autotrader is that the market at identical (ie same yr similar mileage) is almost non existent (like 1 car at best anywhere in the country -for example on one day, there is 1 car in NI - am i expected to review a car in NI? when I am in Worcestershire ?)  at the slightly newer car similar (up to 33% more) mileage the mkt is volatile  cars still sell quickly and autotrade should be a good price guide?-  scarsity doesnt mean discount? you only discount something if there are tons of other options or you are desperate to get rid of it

That's essentially what you posted back at the start, so the other posts in between address these points?

Woodstok2000

waswwa said:

my issue is - how do they justify mkt value (they didnt the first two times or the final time!) - then used 3 cars of which one was already sold  (and increased the excess without explaining why!)  my research on autotrader is that the market at identical (ie same yr similar mileage) is almost non existent (like 1 car at best anywhere in the country -for example on one day, there is 1 car in NI - am i expected to review a car in NI? when I am in Worcestershire ?)  at the slightly newer car similar (up to 33% more) mileage the mkt is volatile  cars still sell quickly and autotrade should be a good price guide?-  scarsity doesnt mean discount? you only discount something if there are tons of other options or you are desperate to get rid of it

As above, Its taken from the likes of CAP, Glass, Parkers etc... they get the details of thousands of sales of vehicles and build the guides so that motor traders know what to pay for a car they are buying or trying to sell, so insurers know how much a car is worth when writing it off.

You're not expected to review a car in NI, but the insurers can use that data to help inform their idea of market value.  They will end up with range of values going from trade prices right up to retail, and your valuation will fall somewhere in that range.  They will want to give you a value at one end, you want a value at the other end, and thats where the negotiation comes in. Its also why you're unlikely to get much in the way of explanations beyond what you have already.

Again, what's the car and what have they offered you?

Aylesbury_Duck

Are you unnecessarily hung up on the mileage?  A 11 year old car with 34k miles on it will have problems, they'll likely be different from problems a five year old car with 100k miles on it will have.   A car's expected lifespan isn't solely determined by mileage.

waswwa

not hung up on mileage - but 2014-2015 cars with low mileage dont exist (or V rarely- as my evidence shows the VERY few that do appear go within hrs) hence a valuation which would force me to buy a 2014-2015 car with substantially more mileave doesnt restore me to my prior position - if (using facts!) the FOS accepts (i)2014-2015 low mileage mkt is ultra thin/non existent therefore cannot be used for mkt value - then (ii) they have to look at newer cars -

I looked then at u45kmiles (substantially more) 2014-2020 with "how many cars can 7k/8k/9k et get me

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81913875#Comment_81913875

You say you are not hungry up on mileage, the write two paragraphs on mileage.

The insurer is not required to "restore me to my prior position", they are required to pay out market value for the vehicle, less the excess. There is methodology to calculate market value variations based on mileage where there are few or limited sales for data, they do not have to look at newer cars, not pay out bases on a newer car. In general after ten years mileage becomes irrelevant anyway.

Market value is based on sold data, not on online adverts, not on regional availability, not based on newer vehicles to give you a wider range of options.

waswwa

insurers only need to pay “market value”.

But market value is defined by replacement cost.

And replacement cost means what it would actually cost you to buy a similar car.

If no comparable cars exist, the valuation method must adjust.

This is exactly how the Financial Ombudsman Service normally approaches disputes.

Their principle is:

The payout should be enough for the consumer to buy a comparable vehicle.

Not a theoretical one.

insurance law in the UK follows the principle of indemnity.

The idea is that insurance should put you back in the same financial position you were in before the loss.

Not better, not worse.