The issue of insurance write-off valuations for cars insured on a market value policy is a conversation I regularly have with classic car owners who did not agree their classic car insurance valuation up front.
A car is damaged in an accident, the policyholder has spent thousands of pounds on the car, but eventually the insurer will offer a settlement based on eBay disposal prices for cars in poor condition with much restoration needed, rather than a true cost of replacement.
JDM Honda Civic Write-Off
A recent write-off case involved a fourth-generation Honda Civic EF GL from the early 1990s. This three-owner, three-door hatchback with c.60k miles from new was quite modified, with the engine and transmission from a JDM Civic SiR including manual transmission with LSD, a full stainless steel exhaust, complete suspension refresh and lots of other rare bits: some £5k in parts alone. Similarly modified cars were found offered at up to £9k and there was anecdotal evidence of lesser examples selling in the £5-7k bracket through enthusiast circles, yet the ombudsman upheld an engineer’s write-off valuation of under £1,000 taken from obviously unsuitable data, rather than considering an independent optinion with an abundance of supporting market evidence.
The reason given was that the independent valuer was not a member of the Institute of Automotive Engineer Assessors (IAEA) – a body which is closely tied to the insurance industry. I am not a member of this group, but I did spend ten years creating the price data relied upon by the insurance industry and am regularly retained by insurers to provide independent opinion for write-off cars in court. This feels like sufficient credibility, but the ombudsman does not agree. In this case, the ombudsman actually asked the insurer who it would accept opinion from.
So experience tells me that relying on the ombudsman to represent one’s interest in an undervalued write-off can sometimes be a dead end. When my own Honda CR-V (one previous lady owner, sensible miles) was declared a write-off by a third party, the third party’s insurers agreed a valuation at retail price but MY OWN INSURER stated that this was an overvalue. The third party insurers revalued, and the engineer assessor pulled in data for cars that were 5-8 years older and of a completely different series (Gen 1 vs Gen 2). After going to the ombudsman, I eventually received a write-off settlement of £900 vs my car’s retail price of £4-5k. To cap it all, the car was Cat B so I could not retain the salvage.
Vehicle Theft from a Driveway
A few years ago, a friend who was selling his very clean 5-door Golf GTD answered a call from a potential buyer who popped around to see it. Starting the car up in the drive for the buyer, they walked around the car, at which point the buyer jumped in the driver’s seat, locked all the doors and reversed down the driveway. My friend dived on to the bonnet and managed to hold on until the end of the road, at which point the thief made a series of wild manouvers which shook my friend off, sending him to the ground. He ended up in hospital.
Later that week, the insurers stated that they would not be paying out on the claim as my friend had given the thief the keys. The news was still fresh in his mind when he attended a neighbour’s drinks do that weekend. She was a solicitor and heard him mention the ombudsman. Unsurprisingly, she recommended a solicitor’s letter straight to the insurer and avoiding the lengthy and likely loss making ombudsman process. He had a cheque for the retail value in his hand within a few days.
ALWAYS USE AGREED VALUE INSURANCE
Classic car owners should be very mindful that thieves want their vehicles and values should always be agreed up front. Do not accept a market valuation policy on any sort of classic car. Should a write-off happen, you will be entirely at the mercy of insurers regarding your settlement and, unless you are lucky enough to be with a very compassionate insurer, it is likely to lead to a significant dent in your wealth.
The advice to go straight to a solicitor is also worth noting. If I was facing a write-off situation on a car without agreed value and the numbers discussed were miles from reality, that would be my course of action.