Car Insurance Excess

[Hopkirk]

My sister in law had an accident recently, which was her fault.

To reduce the premium she had a high volutary excess on a comprehensive policy. The car was pretty old and not worth much.

The insurance company are saying that the car was worth less than the excess and they are demanding the difference be paid, presumably to put towards the cost of repairing the other persons car.

Can they do this?

[boxtops]

I don't know, is the short answer. The third party would claim against your sister's insurance for their repair costs, then have to claim direct against your sister for the excess of THEIR claim. I had to declare the value of my car on my insurance proposal (and it's easy enough to check on Glass's Guide) so I can't see why the insurance company wouldn't have pointed this out to your sister at the time that she requested this level of excess.

[boxtops]

some views here http://www.moneysupermarket.com/community/forums/t/car-insurance-voluntary-excess-48896.aspx

[boxtops]

and here http://www.consumeractiongroup.co.uk/forum/showthread.php?245330-Car-Insurance-Claim-Excess-more-than-Settlement

[bhg481]

I would say yes they can.
When you have an accident which is your fault, in effect the other person sues you for the damage.
You, in turn, go to your insurance company and ask them to give you the money to pay them.
There is an excess on your policy which is effectively the most an accident will cost you - the insurance company will pay the rest.
Supppose you have a £1000 excess on your policy, your car is worth £400 and you cause £3000 of damage to another car.
In this case you put in a claim for the cost of repairs to the other car plus the write-off value of your car - £3400. The insurance company knocks of the excess leaving £2400 and send you that amount.
Unfortunately the repairs to the other car are £3000, so you need to add £600 to pay the claim.
In reality, of course, the insurance company pay the other person directly but if you think about what is really happenning you can see why the insurance company are asking for money from you.

[hc4361]

bhg, are you sure that makes sense?

[bhg481]

Yes, I'm happy with that. It's really a case of trying to see what the full mechanism of a claim is, rather than how it looks to the drivers.
Think about it another way. If the policy were only third party and you caused £3000 of damage to the other car, you would expect the insurance company to pay the £3000 to the other party and then ask you for the £1000 excess. The fact that the policy is comprehensive just means that they pay for your repairs as well or, in this case, since the repairs would cost more than the car is worth, the write-off value. So again, they ask you for the £1000 excess and then give you £400 back as the write-off value of your car. It makes sense to me.

[hc4361]

I am assuming that the insured has paid the excess re the 3rd party vehicle and received the value of her own car.

Or is this assumption wrong?

[bhg481]

The "at fault" person has to pay out £1000 excess, as the total value of the claim is more than that. For £1000 they are entitled to have the other person's car repaired (£3000) and the write-off value of their own car given to them (£400).
Rather than give the insurance company £1000 and then have them give them £400, they just give the insurance company £600 ie, the difference between the policy excess and the write-off value of their car.
Had her car been worth £1500 the insurance company would have paid £3000 for repairs to the other car and given her £500 for her car ie, knocked the £1000 excess of the money they paid her for her write-off.

[johnny37]

if the insured chooses to pay a higher excess to keep the premium down then that is the amount he is choosing to bear in the event of a claim. Imagine the other party was at fault. Any payment to you for repairs or write off would be reduced by the excess.

[hc4361]

I must be misunderstanding the question.

I thought the insured was being asked to pay extra in addition to the £1000 excess.

[bhg481]

hc - I read it that the insurance company are asking for the difference between the excess and the value of her car. If I'm right it makes sense. If you're right she is being diddled.

[hc4361]

Surely the insurance company is quids in with the insured's car being worth only £400? If it were worth £4000 before the write off, they would have to pay her £3000 plus the £3k damage to the third party.

Surely the insured knows she has to fork out £1000 in the event of any claim (or a lesser amount if there is only damage to the third party vehicle and the cost of repair is less than £1k)

[Hopkirk]

I have yet to see their letter, and am getting the info via an unreliable source.
(possible Chinese whispers here)

However I hear that the excess was £500, and they are asking for £450 to be paid to them.

[hc4361]

Has she paid the £500?

[Hopkirk]

Nothing paid yet - I want to see the letter and expect to suggest she challenges their valuation of her car.

Perhaps a suggestion of an ombudsman might make them back down.

I am however half expecting to find the story is quite different. Info so far has come via the mother in law - not known for accuracy.

[hc4361]

In effect, then, they're giving her £50 for the car.

[boxtops]

Ah - let's wait until you have the whole picture then, we are speculating at the moment!

[pixie373]

Lol. I would expect to pay the full excess and that's it.

[TWR]

The Insurance should have / could have questioned the age of the car before insuring it, they are trying it on, tell them to pizz off, if you can not get any solution from them contact the Insurance Ombudsman & state what you have posted to them.

[Hopkirk]

I'll let you know when I have the full story.