Ombudsman Claims Insurers Undervalue Vehicles

The Financial Services Ombudsman says it received over a quarter more complaints to do with vehicle insurance in 2011, and that valuations of written-off motors were among the most common issues.

In all, well over 7,200 people made enquiries to the ombudsman last year.

And the body said some insurance companies’ car valuation are at trade price – or what a dealer would give for a vehicle – instead of the retail price.

For their part, insurers have insisted that the marketplace can be a volatile one and that some owners tend to overestimate the value of their cars.

If you’re unlucky enough to be in an incident in which your motor becomes a write-off, your insurer is meant to provide you with a decent pay-out. Clearly, that does not mean that if you purchased your vehicle for £5,000 some years ago that is the sum you would be entitled to receive now.

But what your insurance company should provide is a replacement that is an approximate equivalent in terms of condition, age and mileage. (Unfortunately, not all insurers follow all of these rules all of the time.)

And the Financial Ombudsman Service reckons that it upholds around half of the complaints it receives, more often than not because the insurance firm has used the trade rather than the retail price to value a vehicle. The difference can run into hundreds of pounds.

The expert advice is to get a fee car valuation online, adjust it for mileage, condition and service history, and then support your claim with prices of real cars for sale where you live.