Insurers are STILL stinging drivers by undervaluing written-off cars, says FCA

Car insurers are cheating drivers by paying them less than the value of their written-off vehicles, the city watchdog said.

Write-off cars are cars that are damaged beyond repair or can no longer be repaired economically.

In these situations, insurers are supposed to pay a fair cash value for the vehicle, but many insist on lowballing customers.

An investigation by the Financial Conduct Authority (FCA) found that some insurers only increase these low offers if a customer complains.

This is despite the fact that the FCA has warned insurers not to do this undervalue cars or other insured items when settling claims.

The FCA issued a similar warning shot to car insurers in 2022, and systematically low insurance payouts were reported by This is Money as early as 2011.

The regulator did not name which insurers were guilty of underpaying consumers for totalitarian cars, but did say it was “in discussions” with the companies involved.

Sheldon Mills, FCA’s executive director of consumer and competition, said: ‘Having your vehicle written off or stolen can be very stressful and we expect companies to provide the right support to help their customers.

‘We expect all motor insurers to take note of our findings and we will engage directly with those who have issues that need to be addressed.’

What are my rights if my car is written off?

If your car is so damaged that it can no longer be driven or repaired at a decent price, insurers are supposed to pay you a reasonable amount that will allow you to buy a comparable car, in similar condition and at realistic prices for your area .

The only thing that the insurer must deduct is the deductible that you agreed to when taking out the policy.

Customers who believe their claim may have been undervalued can complain to their insurer and then to the Financial Ombudsman Service (FOS) if their complaint is not resolved.

The crucial information you need includes as much evidence as possible about the exact details of your car, its condition and important value factors such as a full maintenance history. You therefore need comparable prices for cars in a similar condition on the open market, which can be obtained with screenshots from sites such as Autotrader.

Car appraisal tools and quick sale offers often give lower figures than advertised prices and while car insurers claim that buyers can negotiate discounts, these are often not substantial for used cars in the digital age of easy price discovery.

Complaints against car insurers are one of the main reasons for a major spike in the number of cases being processed at the FOS.

When can I file a complaint with the FOS?

The first thing you should do is contact the insurer you are having the problem with.

If they do not respond, or you are not satisfied with the response, you can file a complaint with them.

If they do not respond within 15 days, or if they do, but you think it is unreasonable, you can contact the FOS, which you can use for free.