New car is stolen but consumer isn’t offered a replacement

Motor Insurance

Reena’s new car was stolen, so her insurer offered her a cash settlement as a replacement wasn’t available. But the amount was less than the market value.

What happened

Reena found that her car had been stolen, which was only six months old. She put in a claim with her insurer, and they told her they'd pay market value for the car. They explained that this was based on the average of three trade guides.

But Reena didn't think that they were offering enough and complained to her insurer. Unhappy with the outcome, she got in touch with us to investigate. 

What we said

We checked the policy documents and found that the policy would provide a replacement for vehicles less than 12 months old. 

We asked her insurer why they hadn't provided or paid for a replacement as per the policy. They told us that Reena's model was discontinued, so they paid the market value instead. 

We confirmed that the model had been discontinued and there wasn't a direct replacement in the manufacturer's line up. 

We explained to the insurer that Reena's policy provided new for old cover, so we didn't think it was fair for them to pay less than the replacement cost. Although the car was no longer available, they should have offered Reena either the purchase price or the last list price of the car, if known. 

We told the insurer to pay Reena the difference between the market value and the last list price of the car. We said they should also add interest to this, at the rate of 8% per year.