UK Motor Insurance – Making A Claim

Most people regard an impact on the road as an ‘accident’. There are those who will say that bad driving is not really an accident in the true sense of the word. There are all sorts of other reasons why you might need to make a claim on your motor insurance. For example, your car might have been stolen, broken into, caught fire, had its windscreen chipped and so on. For this reason, I shall refer to the loss or damage that might arise and that can be claimed upon your policy as the ‘claim event’

So what do you do to make a claim once you have been unlucky, or careless, and had a claim event happen to you?

Let us suppose your car is struck by another vehicle. In the past, you used to have to go and see your insurance broker. Your broker would have given you a claim form or accident report form to fill in. You would be asked for two or more estimates for the repairs to your car. After filling in the form and running around town obtaining estimates, you went back to the broker. He would post them off to the insurance company. They would take 2 or 3 days to set up the claim on their (paper) records. They would reply to the broker, possibly requesting an inspection by their motor engineer. By the time the broker received this, it was a week passed the date of the claim event. You would need to take the car to the chosen repairer (always the cheapest) and wait a few more days before the engineer could see it and approve the work.

There has been a bit of a revolution! This is due in part to the computer and due in part to the introduction in the 1980’s of ‘direct’ insurance. The result is that the speed of service, whether you have bought by telephone or internet, from a ‘direct writer’ or via a broker has improved dramatically.

Let us assume you have all the benefits of a comprehensive policy plus all the ‘add on’s’ discussed in the the section on policy cover.

You can summons help from the scene of the accident, via a mobile phone or nearest pay phone, get your car towed to the nearest approved repairer of your insurer where authorisation for the repair is automatic. A courtesy car or hire car is provided so you can keep mobile whilst the work goes ahead. The chances are that if the repair is not too extensive you will have your car back within a few days. So your car could be repaired and back on the road in the time it took just to get an engineer out to look at it, in the past. And you have been mobile the whole time.

Having returned home, telephone your insurer. they might already know of the accident. Both the recovery service and the approved repairer are instructed to report it to them.

Some insurers will still require an accident report form and will post this to you. Others will partially fill one out on their computer screens whilst you tell them of the accident. Some insurers have done away with the need for claim forms. Instead, they record your telephone conversation. And the recording constitutes your claim form.

Reporting via the Internet is now happening but insurers are slow to adopt this new medium for claims activity. If you do need to go and visit your broker, many of them now have ‘e-mail’ links to their insurer, or they will pick up the telephone to report it for you. Brokers have had to improve their service to their customers to keep pace with the new ‘direct’ companies.

Car Insurance – What To Do When Claims Go Wrong

Things don’t always go that smoothly or quickly!

Many customers cause problems for themselves. They just don’t seem to realise that things are geared up to provide this fast and efficient service to them.

For example, there is the customer who insists on having a claim form to fill in. The customer who does not want to give the details of the claims event over the telephone. O. K. fine, but don’t then expect such a speedy service. You are causing delays for your claim.

There is the customer who wants to use his own garage. So he has to go and obtain an estimate and post or fax it to the insurer. In effect this claim has reverted to the old fashioned and slow way of dealing with things.

Then there is the customer who wants a hire car delivered outside the parameters of the policy cover or who does not like the courtesy car supplied by the approved repairer. Some keep their hire/courtesy car longer than their policy permits and get upset when you ask them to return it or pay the extra costs. Some start off in a hire car with a full tank of fuel, return it empty then complain when they are charged for re-filling the vehicle. (Hire firms charge a very high price for fuel!)

My advice is simple. Follow the instructions of your insurer or broker. They are trying to provide you with the best service in your best interests. Why cause problems and hassle for yourself?

Policy excesses cause a lot of problems. Many people still think that if an accident is not their fault, they don’t have to pay their excess. NOT TRUE. Your excess payment is your share of the loss or damage and you have entered into a legally binding contract with your insurer in which you agreed to pay the first £X amount irrespective of blame for an accident. You might be able to recover this as an uninsured loss. But that does not mean you do not have to pay it in the first place.

Remember that the vast majority of claims are dealt with quickly and without problems

The Total Loss or Write-Off

What is a total loss or write off? It arises where the cost of repairs to a car exceed the value of the car, taking into account the salvage value.

So lets say your car is badly damaged. This could have arisen from an accident, a fire, or theft damage. And it costs, say £5000 to repair it. If the value of your car is , say £5,500 and the salvage is worth £600 then it is cheaper for your insurer to total loss the car rather than repair it.

Suppose the salvage is only worth £400. The chances are they will still total loss the car. The estimated cost of £5000 to repair is based on a visual inspection and assessment of the damage. There could be more damage discovered if it were stripped down. So it would be regarded as a border line total loss.

Total loss procedure. As soon as it is clear that your car is going to be a total loss, your insurer will want the following things to happen.

1) They will want to move the damaged car into ‘free and safe storage’. This is usually at a salvage dealer. The reason is simple. Garages have discovered there is easy money to be made. They won’t get the repair job but they can charge your insurer just for keeping your car on their premises. Some charge extortionate daily rates that make car clamping fees seem like peanuts! Even the cheapest rates are similar to car parking fees in Central London. Insurers pay out millions of pounds each year for storage charges so they want to move your car FAST!

Because a few policyholders have caused problems and cost them unnecessary money they might even tell you they are going to move it in 48 hours rather than asking your permission. What has happened on occasion is that the salvage teams move so quickly that the salvage truck is collecting the car before they’ve even told you it is a total loss! Naturally this can be upsetting to some people.

But taking into account the reason, please be understanding! They are not disposing or your car, just moving it to save money. You might ask why you should worry about saving your insurer money? The reason is simple. The more they pay out on claims, the more you pay out on premiums. It is in your interest to help them save money.

My advice is – help them. Always agree to have it moved from a garage. If you refuse, they can insist you pay the storage charges from the point of your refusal.

Sometimes with an older car, it can be a total loss yet still be safe and legal to drive. It might have a low value and only some minor cosmetic damage. Often insurers will let you keep this at home whilst the next steps in the procedure take place, provided it is not incurring any charges.

2) They will ask you for the vehicle documents. That is the V5, registration document; MOT certificate if your car requires one; and possibly purchase receipts, service records, keys and details of any outstanding finance. They will ask for your Certificate of Insurance to be returned. They will need the original documents before they settle your claim. Copies to start with will suffice but will delay the process.

If you ask them why they want these documents, they will probably tell you they need to check they have the right model of the car, that it had a valid MOT and proof of service record to establish that is has been maintained. These are all valid reasons. But they also want to check out your claim for fraud. Official documents have several anti-fraud measure built into them by the issuing Government agency. A careful check on the originals will enable the claims official to establish quickly that these are genuine documents and not fake. If there is doubt, they can use forensic science equipment to validate the documents. You would have to be a very clever fraudster to forge successfully all these documents.

My advice is – let your insurers have the original documents as soon as they ask for them. Just sending copies delays your claim.

3) Whilst you are waiting for your settlement proposals, your insurers will be doing other things as well. They will record the claim on the ‘motor insurance anti fraud and theft register’. (MIAFTR) This is a national data base that has been recording all insurance total loss vehicles and stolen cars since the early 1980’s. It checks your car against all the information in the database to see if it has ever been the subject of an insurance total loss before, or whether it has been previously stolen and not recovered. It checks against your name and address; post code; your vehicle’s registration number and VIN (vehicle identification number). If there is a match further questions will be asked of you and your insurer might go into ‘fraud investigation’ mode.

MIAFTR also automatically checks your car against the HPI (Hire Purchase Information). If you took out finance to buy it and you still owe money, it will be on this database. And your insurer will find it. So be honest and tell them about your finance. The finance company is the legal owner of your car. Any settlement must be made to them until the loan is paid off. Anything left over goes to you.

Similarly, your claim will be recorded on CUE (Claims and Underwriting Exchange). This happens automatically on all motor and household claims. Not all insurers subscribe but the vast majority do.

Problems arise where the outstanding loan exceeds the value of the vehicle. The insurance policy does not pay off the loan in full.

I recall a scheme for motor cycles. Young people went into a shop, bought a new motor cycle plus all the leathers, helmets and so on with finance against the vehicle. The interest on the loan was very very high. A few days later there was an accident and they would total loss it (or it was stolen). The value of the motor cycle was much less than the total purchase price plus the interest. It caused a lot of upset which was blamed on the insurer and not the stupidity of the motorcyclist for entering into such a bad deal with the shop.

4) Your insurer will be obtaining bids for the salvage. The more they can get, the less the final cost of your claim. There has been a lot of controversy about cars which have been written off finding their way back on to the road. Or being purchased by the criminal fraternity to aid their disguise of a stolen vehicle.

The Association of British Insurers (ABI) have issued a code relating to the disposal of vehicle salvage that meets current legislation as well. All member companies adhere to this code. The result is that most salvage is sold by insurers to reputable salvage dealers. If it is damaged to an extent that meets certain criteria, it will be issued with a code that requires the vehicle to be broken up or scrapped. Cars with less damage could still be repaired and put back on the road. See the section on retaining the salvage.

5) Once all these hurdles have been overcome your insurers will make a settlement proposal to you.

Their engineer will have looked up the trade publications to value the vehicle, amending these figures for the age, condition and mileage of your car. And his knowledge of the local car market. The final figure he comes up with forms the basis of the settlement value given to you. An excess might have to be deducted along with any outstanding finance.

Your insurer should make it clear to you precisely how much you will receive and explain any adjustments to you. If you pay your premium by Direct Debit, the chances are that any remaining premium will also be deducted from the settlement cheque. We shall come back to the subject of premiums in a moment.

6) When you have accepted the value (some insurers might require your signature to a document called a ‘form of discharge’) you will be sent a cheque.

7) Your insurers then own the remains of your car and, subject to legislation and those ABI codes, can do what they want with it. This will inevitably mean they will sell the salvage.

Car Insurance – Variations Of The Total Loss

HP interest. Where there is outstanding finance on the car, or it is on a lease, the settlement cheque goes to the finance company that owns the car. If there is anything left, you will receive this. If the finance exceeds your vehicles value (and this could happen if your loan has a high % APR or it is leased, you will have to send your cheque for the excess to your insurer, they will pay the value of the claim to the owner and you will be left to settle any outstanding debt with your finance provider afterwards.

Personalised Number Plates. You can usually keep these. And transfer them to your next car. Tell your insurer your intentions and then contact the D.V.L.A. to arrange the transfer. It will take time!

Tax Disc. Your road fund licence is yours, not your insurance companies or their salvage dealer. You should remove the disc, obtain a form from the post office and cash it in.

Premium Refund? Suppose you decide not to buy another car. Can you have a refund of premium? The answer is NO. When your insurer pays out your total loss claim they have discharged their contractual obligation to you. The phrase they might use is that your policy has ‘discharged by performance’ Basically your side of the deal is you pay the full annual premium, their side of the deal is to provide you with the protection specified in the contract. They have kept to their part of the deal. To keep to yours, you must pay the full annual premium.

Some common questions and answers regarding total loss can be found on the FAQ pages.

Car Insurance – Third Party Claims

When an accident happens that involves someone else, you have a ‘third party’ aspect to your claim. This could include another driver, a pedestrian, a cyclist, a passenger, or the owner of a house you hit.

Who is at fault ?

That is not a question you or the other third parties (there could be more than one) have to decide or worry about. Give your insurers all the facts and information that you can. If anyone witnessed the accident obtain their name and address and pass this promptly to your insurers. They will consider all the facts given to them and decide if any further investigation into the circumstances is needed. For example, they might want to ask you some more questions to clarify what you have told them. They will send questionnaires to witnesses. They might arrange for an outside investigator to examine the scene of the accident, take photos, produce a sketch plan. They might arrange for you and the witnesses to be interviewed and more detailed written statements to be taken. THEY ARE COLLECTING EVIDENCE – help them as much as you can

Once they have done all they can they will re-examine all the facts and decide whom they believe to be negligent. In other words they will form a view of who is to blame and proceed with the claim accordingly. In the event of a dispute with the other party and their representatives the matter might have to be decided by a judge in the civil law courts .

Please remember – the civil legal system in this country (and I include Scotland here) is adversarial in nature. You ‘take sides’ and enter a battle with your opponent. Your insurer is on your side and looking after not only their interests but also yours as well. I have come across many instances where you, the customer, take issue with the insurer over what they should be doing regarding the third party claim. I would make the following observations

Your insurers staff are professional,trained, experienced people and have a much better appreciation of how the case should be handled than you do
The terms of their policy mean they can take whatever steps they think appropriate irrespective of what you think

Car Insurance – The Blame Culture

We could write a book here about the ‘common law tort of negligence’. There are plenty of legal text books available which when deciphered tell us that it basically boils down to ‘use your common sense, and that is a good way to form an opinion of who is to blame.

Let’s just qualify that a little. In order to be negligent you must:

1) owe a duty of care – e.g. you owe a duty of care to other road users. But do you owe a duty of care to the man half a mile away on a bus, which gets held up in the resultant traffic jam, not to make him late home from work? No – it is too remote. So your duty of care is to the road users around and about you.

2) you have to cause a breach of that duty.

3) the breach of duty has to flow from the duty of care

4) your breach of your duty of care has to cause damage/injury.

In a recent case the third party had already had his car written off in a previous accident. But he was still driving it when along came our customer and crashed into him. Our customer had been negligent and the first 3 of the above rules were met. But was the damage caused in the crash? There was certainly damage to the third party car but there was no loss in value because the car was only worth scrap value to start with.

Car Insurance Claims – Apportioning Blame

If you blame someone else for an accident, you must have proof that shows ‘on the balance of probability’ that they owed you a duty of care, breached that duty, and that what you claim for arose out of that breach.

First of all , let us assume that another driver is to blame for damaging your car. You have comprehensive cover. What should happen?

Your insurers will deal with the damage to your car under the terms and conditions of your policy. They will then want to recover their money from the negligent driver and his insurers.

You will now find out that a comprehensive policy is anything but comprehensive. You will probably have to pay an excess. This applies even though you were not at fault. The number of times I have had people say to me: ‘why must I pay my excess it was not my fault’. Your insurer is dealing with the damage to your car UNDER THE TERMS AND CONDITIONS OF YOUR POLICY. At this stage, fault is not a question on their minds. When you purchased your policy you agreed in the contract to meet the first £X of each and every claim for damage to your car. You are contractually obligated to pay the excess. So now that you understand this, no matter how unfair you think it is, please do not waste your insurers time arguing with them about it!

You will have to make telephone calls, that will cost you money. A cost not covered by your so called comprehensive policy. You might need to write letters and post documents to your insurers. Again, that is not covered by your so called comprehensive policy. You will be without your car whilst it is being repaired, or until you receive settlement of a total loss claim. This means, bus fairs, train fairs, taxi fairs or hire car costs. Again, with few exceptions this is not provided for by your comprehensive policy.

Perhaps you have been injured in the accident. At the very least this is all going to cause you lot of hassle, stress and inconvenience!

These are all ‘uninsured losses’. Losses that are not insured by your comprehensive policy. It is when an accident happens that you find out the hard way how important it is to have legal expense insurance or Uninsured Loss Recovery added to your policy!

You are entitled to recovery all these losses from the negligent driver and his insurance company.

Car Insurance Claims – Uninsured Losses

If you followed my advice on buying insurance, you will have legal expense insurance. They will undertake recovery of these losses for you, where you have reasonable prospects of winning – but without a guarantee of success. Some now offer a retrospective type of cover but it is expensive.

If you do not have this extra cover but purchased your policy via an insurance broker, they might agree to recover your excess for you. This was a task all insurance brokers used to undertake for their customers but most will now try and sell you legal expenses insurance. (They get extra commission for doing so)

If you have bought your policy from a direct insurer and did not take out legal expense insurance – tough. You are on your own. You might have a go at uninsured loss recovery yourself – talk to your insurers claims staff as they can ‘pave the way’ for you; or you could approach one of the many firms that have sprung up in recent years who will undertake this for you. Some of these include ‘credit hire’ and ‘credit repair’. This is where you are provided with a car hire on credit or a repair on credit. They will then pursue recover of these losses, and quite often your other uninsured losses, from the third party insurer. If they fail you will eventually have to pay for the hire costs and repair work yourself. But they will usually only undertake work where there is a clear chance of winning.

There are now solicitors who operate on a ‘no win no fee’ basis. They will take a share of your payment when you win your case. If you have no legal protection insurance, a lot of uninsured losses, perhaps an injury and a case where who is to blame that is not very strong, then it might be worth looking at this option. But will then take you on? The higher the risk of losing, the greater the increase in their fees. They will try to gauge at an early stage what the risk of winning the case is. If it is less than 50%, they probably will not want to help you. Remember, that under English Law, the party that loses an action pays all the costs (except for ‘small claims track’ where fixed costs apply). Thus, if you have a good case, why give away part of your compensation to a lawyer or one of the new “After The Event” insurance providers? (You cannot have failed to see their advertisements on television!)

If you find yourself without legal protection insurance and need to have a car to keep you mobile – my recommendation is to try speaking to the third party insurers first. If necessary, tell them you are considering credit hire. All sensible insurer now have deals with hire car companies so that they can provide you with a car, at their expense, for the duration of repairs. If they will not assist you, then you could go to one of the credit hire firms

If you have only third party fire and theft cover, then the damage to your car is also an uninsured loss. Again my recommendation is to talk to the third party insurers. They will probably arrange for your car to be repaired by their approved repairer network at their cost. This is of course provided you have a clear cut case to pursue.

Third Party Losses – The Small Claims Court

There will be a few occasions where you have a very good case to pursue but your opponent won’t play ball with you. What can you do?

If your claim against the third party , including the insured losses, is less than £5000 and there is no injury element or the injury element is very small (say a bruise or two) and worth less than £1000, you could try the small claims track of the County Court.

Where you have legal expense insurance your legal expense insurer will appoint, and pay for a solicitor of their choice to deal with this for you.

In the absence of that, unless you have an insurance company that is willing to fork out more money for a solicitors bill, you will have to do this alone. Some insurers have special deals with solicitors for small claims – the County Court arbitration procedure.

I would not recommend you to instruct a solicitor yourself for this reason: under the small claims procedure, the Court will not award legal costs to the winner. So if you appoint a solicitor, you will have to pay your own legal bill whether you win or lose. But as the intention of the Courts it to let ordinary people obtain justice in an informal procedure there is no need to have a solicitor represent you.

In fact this might even give you a tactical advantage over your opponent if they have a solicitor and you do not. The judge is likely to bend over backwards to help you put your case clearly and fairly. Also you might not have to go that far. Your opponents insurers will always have an eye on the bank balance. It might be cheaper for them to give in to you than fight on. On the other hand, the third party might also feel he has a good case and decide to run a defence all the way to a hearing. But at least you will have had your day in Court. And a chance to convince an independent judge that you are right.

If you want to know more, or you are in this position now, your local county court have leaflets that will help you follow this procedure. You can also obtain more information from the Lord Chancellors web site. There are also some excellent books, written in a friendly style available at your local library. Please check these out, talk to your insurers (they might want to include their outlay) who can probably give you a lot of support, and go for it. Try not to get too stressed up. Plan, prepare and document your case carefully and if you have a good case you should win.

Depending on what happened, it would be worth taking a few photos of the scene of the accident that show your view, the other drivers view and which help to explain your version of what happened. Prepare a sketch with some measurements showing road markings, signs and any identification points. (Please be careful that you don’t cause another accident when running around trying to measure the width of a road. Pace it out and take an approximation if the road is busy – it will usually be enough). If there is a dispute over road markings (e.g. the lane arrows on a road approaching a roundabout) then the sketch with photos will prove to the judge what the road really looked like and prove your point. If there is no dispute then this sketch and photos will help the judge understand what happened.

If there were witnesses, try and obtain a detailed written statement as to what they saw. Try and exclude opinions and hearsay. You just want them to comment on the facts, not who they thought was to blame.

Make sure you have estimates, receipts invoices for the amount of money you are claiming. Don’t forget to add in your postage, incidental losses and interest.