When Car Insurance Lets You Down

Disputes occur for a variety of reasons but the most common ones are highlighted here.

Car value
If a car is declared an insurance write-off – meaning it will cost more to repair than the car is worth – the owner is often surprised and shocked to find that the amount they're offered by their insurer is far below what they paid for the car and what they think it's worth. In actual fact, a car's value decreases the longer it's on the road, with the largest drop being in the first 3 years after purchase. So if you've written off a new car, expect to be out of pocket. Many car insurance firms will actually substitute a written off car for a car of the same make and model to avoid a dispute over value.

Personal possessions
Most policies include personal possessions cover, and it seems like a good idea. But in reality the amount paid out tends to be poor, with a very low maximum limit regardless of the items stolen. Take into account the excess you'd have to pay yourself and it probably isn't worth harming your insurance record as the amount you'd get back probably wouldn't cover the cost of replacing the items. In addition, some insurers may refuse a claim altogether, stating you shouldn't have left the items in view in the first place. If you're worried about the level of cover for your personal possessions, check with your insurer. It may be worth getting any expensive items insured separately.

Theft by deception
This ominous-sounding problem can occur when you let someone else drive your car and they don't return it. It is technically theft, but because you've actually handed the keys over, your insurer will state you haven't taken care of your car and therefore won't pay out. This problem can also arise when you sell a car, let the new owners drive away, then the payment turns out to be a fake or a bounced cheque. If you haven't been paid in cash, it's best to keep hold of the vehicles documents and even a spare key until payment has cleared safely.

Knock-for-knock
This is a practice used by some car insurance firms if they think a dispute between claimants will be lengthy. Each insurer will then pay for their own customers claims instead of pursuing the other. Thus, when the driver not at fault comes to get a new car insurance quote, they often find they have been penalised for the accident regardless. It can lead to a higher premium and loss of No Claims discount. This is another reason why it's important to get the other persons contact details in the event of an accident.

Personal details
Any change to your personal details, or to the cars specifications should be declared to your insurer immediately or your future claims could be invalid. The same goes for omitting details when applying for an initial policy. Not mentioning the fact that your car is kept overnight on the road may seem like a good way to get cheap car insurance, but if you have to claim and your insurer finds out the truth, they can refuse to pay out. So it's important to always be upfront and honest with them to protect against this happening.

By: J Tillotson