HomeCar InsuranceDrivers being ripped off by car insurers not paying out 'fair' compensation

Drivers being ripped off by car insurers not paying out ‘fair’ compensation

One-third of motor insurance providers have been ranked as poor when paying out for car accident claims, according to new research.

The Financial Conduct Authority recently said it had concerns about how some insurance companies were valuing cars that had been written off or stolen.

The organisation said it would ask insurers to explain themselves after some were only increasing the initial settlement value after the customer lodged a complaint.

New research from Which? has found that eight out of 24 providers scored just two stars out of five for settlement values.

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Car crash

Some drivers may not be getting suitable levels of compensation after an accident


This included AA, Admiral, Bank of Scotland, First Central, Halifax, Quotemehappy.com, Sainsbury’s Bank and Swinton Insurance.

The consumer champion said some drivers would be being hit with lower charges when claiming after an accident, even though they may not be aware they were being lowballed.

Which? is now calling on the financial regulator to take tougher action against insurance providers who do not offer acceptable levels of compensation to drivers.

Rocio Concha, director of policy and advocacy at Which?, said it was becoming more difficult for drivers to claim following a car accident as insurance companies offer low payouts.

She said: “It’s concerning to see that a third of firms analysed are rated poorly by customers for their payout values, despite repeated warnings from the regulator not to undervalue cars when settling claims.

“There is ample data available to firms and regulators on car values by age, and firms are obliged under the Consumer Duty to demonstrate fair value.

“The FCA must now insist that firms take action to assure customers they will get a fair price for their vehicle should they need to claim, without undue hassle or needing to complain to get a better offer.”

One couple had been involved in a car accident and received a compensation settlement of £8,400, £4,000 short of how much they had paid for the car, which was now written off, despite only having it for four months.

A second offer – £8,610 – was rejected, as was the third offer of £9,285. This came after the insurer, Hastings Direct, had an expert look at the written-off vehicle to assess the damage.

The insurer said it “aims to settle claims quickly and fairly and in line with the current market value of a vehicle that is written off”.

They added that the initial offer was based on the vehicle information available at the time and updated their valuation once they learned more.

A spokesperson for Hastings Direct told Which?: “We aim to settle claims quickly and fairly and in line with the current market value of a vehicle that is written off. In this case, we made an initial offer based on the vehicle information available.


Car insurance policy

Eight of 24 car insurance companies were rated as being ‘poor’


“However, following receipt of further information about the vehicle, including an engineer’s report and photos, we offered an updated offer of £9,300 to the couple and they accepted this amount.

“We have apologised for the payment delay and are pleased the couple are happy with this outcome.”

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