We see complaints from people who say their insurer has undervalued their vehicle, or they're unhappy about how it was written off.
Types of complaint we see
A customer might make a complaint about your business because they say you:
- haven’t paid them enough for their vehicle
- have scrapped their vehicle without telling them first
Most complaints involve disagreements about the market value of the vehicle. The market value is the price the vehicle would have sold for at a reputable dealership just before it was damaged or stolen.
Handling a complaint like this
We see complaints where insurers and their customers have made mistakes, meaning the valuation in dispute is based on the wrong details. So it’s important that you check the vehicle’s details have been recorded correctly.
When you receive a complaint, you should reply to your customer within the relevant time limits. If you don’t reply within the time limits, or the customer disagrees with your response, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly and have reflected carefully on the circumstances of the events.
What we look at
We use trade guides as an indication of what a fair valuation should be. We might also ask you and the customer for information, including things like:
- independent engineer or expert reports – including any details of modifications
- copies of valuations from the guides or other sources
- a repair estimate
- evidence of pre-existing damage and what it would cost to repair it
- vehicle history
Read more about what we look at for specific types of complaints:
To decide whether a valuation is fair, we compare it with prices in online motor trade guides such as AutoTrader, CAP, Percayso and Glass’s.
If the guides all give a similar value – and your valuation is in line with the trade guides and the evidence provided – we’re likely to agree with it.
But there are occasions where the values given by the guides can vary significantly. If your valuation is in the lower end of the values given by the guides, we’d look to see if it is supported by other evidence, such as adverts or an expert’s opinion.
If we think the valuation is unfair, we’ll tell you to adjust it to either the highest value in the guides, or to be in line with the valuation supported by the other evidence – whichever is the fairest in the circumstances.
If one guide price is significantly higher or lower than the others and there is something to suggests it’s wrong, we may think it’s reasonable to discount it. This depends on the value of the vehicle. For example, a difference of £200 would be significant for a £1,000 car, but not for a car worth £9,000.
Customers sometimes say the amount they have been paid is unfair because they’ve seen similar vehicles advertised at higher prices.
We haven’t historically placed much weight on adverts to decide whether a valuation is fair.
Although, you should be aware that more recently, we’ve been told by the valuation guides that generally cars are selling at or close to advertised prices. So, we consider adverts depending on the circumstance of the complaint. However it’s important to ensure the adverts are of like for like vehicles, as small variations can impact how much a vehicle is worth.
If a vehicle has had modifications, the customer might think it’s worth more than the amount their insurer has offered.
Some modifications are done to keep the vehicle roadworthy. For example, replacing the engine. But this type of modification might not change the value of the car compared with trade guide prices. Similarly, small additions such as satnavs aren’t likely to add much value.
We hear from people who’ve added things like spoilers or racing exhausts. Although these might increase the car’s appeal to some people, they could put others off. So on balance, the overall market value might not be any higher.
Very occasionally, we may decide that the particular quality of an accessory would increase the vehicle’s value. But these vehicles are often specially insured through an agreed-value policy.
Left-hand-drive or imported vehicles
Insurers might take off money from the market value of the vehicle if it’s left-hand drive. Left-hand-drive vehicles are usually worth less in the UK, so we’d normally say it’s fair for your insurer to deduct the difference between left-hand drive vehicle and a right-hand drive vehicle, from the market value.
If it’s an imported right-hand-drive vehicle then this is also likely to affect to market value too, so it would be fair for an insurer to make a deduction from the market value for this. However, if an insurer makes a deduction for either of these, we would ask for supporting evidence to show the deduction is fair.
If the vehicle is a classic car, a deduction won’t apply. For example, on a 1950s Cadillac, the fact that it’s left-hand-drive may be seen as a feature to a specialist market. Or the owner might have insured the car on an agreed-value basis.
Vehicles recently purchased second-hand
If your customer bought their car second-hand just before the claim, we’d still expect you to have used the guides to get a valuation.
The guides should give an accurate valuation and it may just be that the customer paid more than the guides suggested it was worth.
Although, if there’s a big difference you should think very carefully about whether this suggests the guides are wrong. In this case, we’d expect you to review other evidence, such as adverts, to get to a fair valuation.
Vehicles not covered by the guides
The trade guides don’t value older vehicles – this is usually those over 20 years old.
We also see valuation complaints for vehicles that are less common such as agricultural machinery, unusual vehicles or conversions such as ice-cream vans or campers.
If we can’t use the guides to work out a valuation, we’ll ask for other information from you and the consumer, such as engineer’s reports.
Commercial vehicles will be subject to VAT when sold by a dealer. If the policyholder isn’t VAT registered, then we’d usually say the settlement should include VAT.
If there’s any doubt about whether the vehicle is liable for VAT we’d expect you to show you’ve allowed for it.
Some people say they’ve been told their car wasn’t in good condition, and they’ve been offered less money than they expected.
We’ll look at engineers' reports for information about the vehicle’s condition. We’re unlikely to agree with a lower valuation if the engineer hasn’t given specific reasons, or for wear and tear that would be expected in a car of that age.
Most policies say the vehicle must be maintained in a roadworthy state. If you’ve rejected claim because the car wasn’t roadworthy, we’ll look for evidence that the loss or damage was caused – or significantly impacted – by this.
The Insurance Conduct of Business Sourcebook (ICOBS) says it would be unreasonable for you to reject a claim for a breach of ‘warranty’ or ‘condition’, unless the circumstances of the claim are connected to the breach.
If you can show the car didn’t have a valid MOT and would have failed one, we’d probably agree that a small deduction is reasonable.
We see complaints where the insurer has reduced the settlement because of damage which existed before the incident happened.
We’d only consider it fair if the pre-existing damage would have affected the vehicle's market value. For example, small scratches might affect the value of a brand new vehicle, but not one that is 15 years old.
Vehicles that were previously written-off and then repaired
If a customer knew they were buying a repaired write-off, we may decide it’s fair for you to make a deduction of up to 20%.
However, they may not reasonably have known they were buying a car that was previously written-off. In this case, we’re likely to say that you should pay the full market value.
We hear from people who say they:
- didn’t know their car would be scrapped after it was written off
- wanted to keep the written-off car or the ‘salvage’
- lost possessions that were inside the car
We don’t think it’s fair to scrap a car without any warning. So we’ll check whether the owner told you they wanted to keep the salvage.
In some cases, the salvage has been returned to the owner, but they’re unhappy with the amount that’s been deducted to reflect this. Normally, we’d say it’s fair to pay the owner the full market value, deducting the amount you would have made from selling the scrapped vehicle. But we’ll want to see evidence to show what you would have got for the salvage.
‘Agreed-value’ policies require an insurer to pay a previously-agreed amount. These policies aren’t very common and are normally only used for valuable or classic vehicles.
You will have assessed the premium on the basis of the vehicle's agreed value. So if the a vehicle under an agreed-value policy is written-off, we’d expect you to pay that amount.
But we wouldn’t expect you to limit your valuation based on what the consumer said the car was worth when they bought the policy, unless it was made clear to them this would happen.
Most insurance policies for vehicles that are new or less than 12 months old will provide the owner with a new vehicle if:
- theirs is written off within a certain time
- the cost of the repair is more than 60-70% of the current list price
If this isn’t the case, we’d say this is an unusual limitation and we’ll look for evidence that it was made clear at the point of sale. For example, a key facts document saying the policy will only pay market value, or if it was highlighted by the seller.
In some cases, the policy says that the insurer will provide a replacement vehicle, but the owner wants the money instead. We’d usually say that money should only be paid to the amount the replacement would have cost the insurer.
A like-for-like replacement may not always be available. We’re unlikely to agree the amount you’ve paid is fair if it’s less than what you would have paid for a new replacement, had it been available.
You may not offer a new vehicle replacement because you say the cost of repairs is less than 60-70% of the current list price. We’d check that the cost of repairs has been worked out fairly.
You may have refused to provide a new vehicle replacement, because the vehicle is owned through a personal contract purchase (PCP) or hire purchase agreement. This is because the finance company is the owner of the vehicle until the consumer makes the final payment. In these circumstances, we’d say it was reasonable for you to provide a new vehicle replacement, as long as the finance company agreed.
Putting things right
If we decide you’ve treated the customer unfairly, or have made a mistake, we’ll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn’t happened.
For example, if your valuation was unfair, we’d normally tell you to increase the valuation. We’d also tell you to add 8% interest to the extra amount payable or the full amount payable – if you haven’t already paid this or made it clear to the consumer they can have this without it prejudicing their complaint.
If the car was scrapped without the owner’s consent, we’ll look at the impact this had on them. We might tell you to compensate for any distress or inconvenience that resulted from losing the car, as well as for any items that were inside the car when it was scrapped if these weren’t removed.
Find out more about how we award compensation.
Insurer doesn’t look beyond trade guide prices to value a classic motorbike
Settlement offered without VAT after van was written off in an accident
New car is stolen but consumer isn’t offered a replacement
Insurer reduces settlement offer because of pre-existing damage to van
Business Support Hub
If you want to talk informally about a complaint you’ve received, you can speak to our Business Support Hub. Our Business Support Hub can give general information on how the ombudsman might look at a particular complaint. The Business Support Hub can also offer guidance on our rules and how we work.