Car owners shortchanged
If your vehicle was stolen or written off you may be due compensation, says Paul Lewis.
More than 270,000 car owners whose vehicle was stolen or written off will get compensation averaging more than £740 each, the Financial Conduct Authority (FCA) has announced. It discovered that some insurers routinely assumed that an older vehicle that was a total loss would already have suffered minor damage or been neglected. They then deducted an amount – usually a standard 20% – from the full market price for a vehicle of that age. This left some drivers unable to use the money to replace their vehicle with an adequate substitute, and particularly penalised careful owners.
The announcement follows a warning to insurers about such undervaluations in 2022 and a review two years later of a total of 18 firms covering more than 90% of the market. That identified what it called “shortcomings” in the valuation of vehicles, and revealed that some firms knowingly made low offers and only increased them if the customer complained. In future it said firms must make sure they explain the settlement offer clearly and state what deductions from a market price have been made and why. They should also give customers adequate time to check and challenge the figure. Not all insurers were guilty of breaking the rules; the FCA also found some firms that did treat customers fairly and offered settlements for a stolen or written-off vehicle which were in line with the market price for a vehicle of that make and age.
The FCA does not name the firms it found to be breaking the rules, but it did specifically say that it had required Direct Line Group to review five years of claims in relation to vehicle valuations and pay redress where appropriate. The firm has now done that.
The FCA says £129 million has been refunded to 150,000 custom[1]ers. But that leaves £71 million still owed to 120,000 people. The firms involved should be reviewing claims and issuing refunds auto[1]matically. But if you think the above may have happened to you when you claimed for a vehicle that was a total loss, it’s worth making a complaint to your insurer to see if you are entitled to compensation. If you have a dispute, take it to the Financial Ombudsman Service: financial-ombudsman.org.uk.