Is Your Car Insurance Payout Right-On Or Write-Off?

Kath Jukes, a policyholder at LV=, was involved in an accident where her car was declared a write-off. She had paid more than £7,000 for it and had clocked up only 16,500 miles. LV= gave Mrs Jukes a cheque for £4,300 after finding that two cars in her area in a similar condition cost that amount.

However, Mrs Jukes tracked down the two cars and reported that one was not within her local area and the other had been sold. Furthermore mechanics informed her that due to the low mileage of her car it would cost up £500 to £725 more to fix than her insurance company had given her.

Mrs Jukes said: “LV= has made the whole thing enormously stressful. I can't buy a car for its valuation in this area, especially one with such a low mileage.”

LV= have since raised the amount to £5,000 and waived the excess.

Jonathan Lelliot, a customer at Norwich Union, has been attempting to raise his insurance amount for his written-off car. He was offered £3,000 but has seen similar cars in his area for sale at £600 to £1000 more. Mr Lelliot sent photos of his car to the insurers to show its condition but the Norwich Union have not increased his payout.

“With two children we need two cars,” he said, “Norwich Union is being very difficult. I'm not trying to get more than I think the car is worth I just want a fair payout.”

Discrepancies can occur when insurance companies estimate the value of a car which lead to policyholders being disappointed when they receive a payout because their car is written-off.

The valuation by the insurers does not always take into account the region the policyholder lives in and the time of year. For instance urban areas may not have the need for Landrovers so they will generally cost less there than in a rural area. Cars with retracting roofs will be more in demand in milder months rather than the winter months.

Valuations by insurance companies have also been reported to decrease because the insurer does not take on board that the car was in good condition.

A spokesman from the Financial Ombudsman, said: “It is expected that cars driven for a number of years will show signs of wear and tear. We would not expect to make deductions for minor imperfections that have been the result of wear and tear.”

Another point raised by disgruntled policyholders is that quite often that those who receive a cheque from their insurance company for their written-off car do not know that if they cash it they are accepting that amount. Consequently they are unlikely to receive additional cheques. The advice is to cash the cheque and include a letter explaining that cashing it is not acceptance of the car's valuation by the insurance company.

For those concerned about decreased value of their car they can consider Guaranteed Asset Protection Policy. This is a kind of car insurance that covers the shortfall between what is paid by the insurance company for a write-off and the amount the insured originally paid for the vehicle.

Linsey is an author of several articles pertaining to Car Insurance. She is known for her expertise on the subject and on other Business and Finance related articles.