You are here: Home - Insurance - News -

Consumers need to take a stand as insurers undervalue car claims

Written by:
The Financial Conduct Authority (FCA) said that some consumers whose cars were being written off by their insurers after an accident were being given less than the vehicle’s fair market value. Often insurance companies are only increasing the payout after a customer complains.

The financial watchdog said that the current cost-of-living squeeze made these cases even more damaging to consumers and that it was taking action against firms that it believes are violating FCA rules.

 Sheldon Mills, executive director, consumers and competition at the FCA, said: “When making an insurance claim, people shouldn’t need to question whether they are being offered the right amount for their written-off car or other goods that they need to replace.

“Insurance firms should offer settlements at the fair market value. This is especially important now as people struggling with the cost of living will be hit in the pocket at precisely the time they can ill afford it.

“We are watching the behaviour of firms closely and will act quickly to stop firms and prevent harm to consumers where we see it.”

While insurers were probably also feeling pressure to control costs, doing so by undervaluing vehicles and making low offers is unfair, the FCA said, and would hurt the most financially vulnerable people the hardest.

Complain to insurance company then the Ombudsman

The regulator said customers who think they should receive a higher offer should first complain to their insurer and then if it’s not resolved, complain to the Financial Ombudsman.

Insurers are allowed to offer cash in lieu of a repair or replacement, but sometimes that’s not going to best suit the client.

The FCA says insurance companies should:

  • ensure customers understand the implications of the different settlement options available
  • have sufficient claims-handling procedures, and
  • not incentivise their staff to engage in practices that could harm the value a client deserves.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week