Car Insurance: One bump and your old car could be on the scrapheap

car scrap

When Lesley Hall claimed for minor damage to her old Toyota Corolla, her insurers said her car was a write-off and offered £40.

Lesley Hall in her L-reg Toyota Corolla: 'I know it is not worth a lot, but the money they offered would not even buy a new tyre.' Photograph: Graham Turner for the Guardian
Drivers of older cars are being advised to think carefully before they are tempted to claim on their car insurance following a minor bump. The warning comes after one London motorist had her vehicle written off following the smallest of accidents, in which just the side light on her ageing Toyota was broken.

Lesley Hall, who lives in London, was told by her insurer, Covéa, that it would send her a cheque for just £40 for her perfectly usable and very reliable L-registration Corolla, after an engineer decided it wasn't worth repairing.

Hall, who works for a housing trust, says she wishes she had not claimed at all, but describes the £40 offer she received from Covéa as an insult.
The French company, which provides car policies on behalf of Lloyds bank, has since backtracked, but the case shows the crazy way that insurers can treat the owners of older cars, and why in the majority of cases you would be better off not to claim.

It also shows up how little consumers know about the write-off procedure and their rights if they are on the receiving end of the process. The collapse in the value of older cars, coupled with the increase in repair costs in recent years, means it has reached the stage where cars with any kind of damage are increasingly being written off.

"I have been driving for over 40 years and have never claimed from my car insurers. I have a nine-year no-claim bonus," Hall says. "I ran into a car door, and although I only broke a side light on my car, I had to put in a claim for the other car. I did not realise at the time that I did not need to claim for my damage."

After a claim was filed, the insurers sent an engineer, who produced a report saying it was not economic to carry out repairs given his valuation of the vehicle at just £312. In spite of the fact that the only damage caused by the accident was the broken indicator glass, he took into account the other minor scratches and dents Hall had accumulated during 12 years of driving on London's roads.

In her case the repair costs of fixing a sidelight were never going to exceed her £200 excess – the first proportion of the claim which she would have had to pay – but no one at the company pointed this out.

When she complained to Covéa at being given just £40, she was told it was not possible to withdraw her claim as the engineer had already inspected her vehicle.

"My car, although old, has always been regularly serviced and has an MoT until next February," she says. "I've had it 12 years and it has never let me down. I know that it is not worth a lot, but the money offered by the insurance would not even buy a new tyre. It all seems rather unfair."

Following the Guardian's intervention, Covéa has said it will no longer write off her car and has substantially upped its offer. Instead of the £40 it originally offered, it will now pay her £533, after a reduced £100 excess has been deducted.

A spokesman for Covéa says that its engineer used established insurance industry guidelines to come up with the valuation, taking into account the car's low mileage and the condition of the bodywork.

This has since been revised upwards "as a gesture to recognise that at some time during her claim we felt our service had fallen short of our usual standards".

How your car will be assessed

Insurers will write off a car if the cost of the repairs is as little as 60% of its deemed value. Vehicles that are worth £5,000 could be considered to be beyond economical repair if the costs exceed £3,000. Assessors use four categories of car insurance write-off to rank the seriousness of accident damage. Vehicles in categories A and B are very badly damaged and cannot be put back on the road, but categories C and D are for "economic write-offs" – where damage is costly but not necessarily dangerous and can be driven subsequently.

The Association of British Insurers says that insurers will generally listen to customers who want to put their car back on the road and adjust the payout to reflect that. They will usually hand it back and deduct the car's scrap value from the payout – further reducing the final amount you receive – making the original idea of claiming even less worthwhile.

Insurers declaring a category C write-off will inform the DVLA and a Vehicle Identity Check marker is put on the file. It you want to carry on using the car, you need to have it checked to establish the vehicle's identity and clear the marker. The test costs £41. Cars that are given category D write-off status are not required to do this. Plenty of category C and D cars are driven for years after being written off.

Most of the disputes with insurers revolve around the car's valuation. Insurers, particularly those at the lower end of the cost spectrum, will invariably offer the lowest figure they think they can get away with. You don't have to accept it – if cars in your area in the same condition and mileage are making more, point this out – and supply the evidence. If your car has an expensive service history, plus recent tyres, new tax disc etc, make this point.

If you are not happy with the outcome of the claim, take the case to the Financial Ombudsman Service, where you should be given a sympathetic hearing. In the past it has accused some insurance companies of valuing by trade price – the amount a dealer would pay – rather than the higher retail price.




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