If you’re unlucky enough to have your car stolen, or it’s involved in a crash, your insurer will have to work out what it’s worth and pay out accordingly. How much it’s worth will also dictate whether or not it’s written off, depending on the cost of fixing it; you can find out more about how and why cars are written off in our guide.
Having to make an insurance claim tends to be traumatic enough, without it turning into a battle between you and your insurer. Unfortunately that’s exactly what often happens; you’ve got a sum in mind when you put in that claim and your insurer has a different figure. If you’re lucky the two aren’t so far apart that there’s no hope of meeting somewhere in the middle – but don’t count on it.
The bottom line is that your insurer will pay out what it thinks your car is worth – or in other words, the cost of buying an identical replacement. And therein lies the problem, because finding a car just like the one owned by you that’s just been crashed or stolen might be all but impossible.
When insurance companies are dealing with payouts they’re not attached to your car like you might be. They don’t care about the hundreds of hours you’ve lavished on cleaning it and keeping it as good as new. The fact that you’ve owned it from day one so you know it’s never been crunched. Or the fact that you’ve just spent £1000 on a full service and a new set of tyres. If it’s old it’ll be relatively worthless, so don’t expect to get back all of the money you’ve put into it.

How a valuation is achieved
When your insurer works out what your car is worth they’ll take into account a whole multitude of factors but the start point will be a valuation tool such as the one offered by cap hpi – pretty much the same service that’s available to you as a consumer.
As you can see by clicking on the link above, just by putting in your registration number and a mileage a value can be worked out, because your car’s details are automatically pulled through. This tells the tool your car’s engine capacity, bodystyle, colour, gearbox type, age – a whole stack of variables that can make a big difference to what your car is worth.
What the tool can’t do is take into account your car’s exact condition, and that can make a noticeable difference to its value. If it was in showroom condition before it was stolen or written off it would have been worth noticeably more than if it had been run on a shoestring and abused. Bear in mind though that once your car is stolen, proving it’s a minter could be tricky…
However, if it’s a low-mileage car and you’ve got a string of MoTs to prove it, that’ll up its value. If you’ve got the full history from day one that will show you’re fastidious and this will also help you secure a bit more cash from your insurer – although perhaps not as much as you’d like.
Challenging the offer
Just because your insurer has offered you a settlement sum you don’t have to accept it – although you do have to be reasonable. So if your showroom-condition low-mileage 15-year old Ford Focus has a guide price of £1200 and you want twice that because it’s the apple of your eye, don’t expect your insurer to be too sympathetic.
What you’ll need to do is establish what cars are actually changing hands for by scanning the classifieds and seeing what you can find that’s similar to what you’ve lost. If you can’t find anything similar for less than £2000 you’ll need to show the evidence to your insurance company and see what they say.
The chances are that you won’t find a car exactly like yours, down to the colour, mileage, options and exact spec, but you should be able to track down a car that’s not too different. Armed with its asking price you can then challenge your insurer to be a bit more generous.
There is another way of adding weight to your argument and that’s to pay for an independent assessment of your car. Your insurer should accept this value as a definitive figure but beware – it could be lower than you’ve already been offered. Plus you’ll have to pay a non-refundable fee up front so you could be left even more out of pocket.
If you’re really unhappy about the way your insurer has dealt with your claim, go to the Financial Ombudsman Service but bear in mind there’s a six-month deadline to file a complaint.
Don’t forget the excess
Once you’ve reached a settlement figure with your insurer they’ll need to cough up – but don’t forget that they’ll be deducting your excess from that sum. So if your excess is £150 and you’ve agreed on a pay out of £2500, you can expect a cheque for £2350. Not a disaster but if your excess is £500 and your car is worth £1200, the £700 you get might not be enough to get you back on the road.
The thing is, if the payout you can expect from your insurer is just a few hundred pounds you have to consider whether it’s worth even making a claim. That lump sum might come in handy just now, but you could end up paying very handsomely for that cash at renewal time through increased premiums once your no claims bonus has disappeared into the ether. But that’s another article for another day…