If you drive an old or damaged car, prepare to be disappointed if you need to claim on your insurance following a collision.
The Financial Ombudsman Service has this month set out guidelines which mean that, in some cases, insurers may be well within their rights to refuse to pay the full cost of repairs after an accident.
The Ombudsman is the state-backed organisation which settles disputes between insurers and their customers.
It says that policy providers are only obliged to put claimants in the financial position they would be in if the accident hadn’t happened.
This means that an insurer can limit the amount it will pay out if part of the repair involves fixing existing damage or issues caused by wear and tear over the years.
Complaints to the Ombudsman about car insurance rose by 7 per cent last year, following an increase of 26 per cent in 2011.
In its latest newsletter, the Ombudsman says: "We continue to see problems arising from disagreements about the cause of the damage to a vehicle – particularly in those cases that involve accidents.
"We often see consumers and insurers disagreeing about whether all the damage had been caused by the accident - in which case it is the usually the insurer’s responsibility to sort it out – or whether some of the damage had been caused by wear and tear."
Car insurance policies typically state that they will not pay out to fix problems that result from normal wear and tear, or depreciation.
Another common clause is that the insurer will not bear the cost of any repairs which improve the vehicle’s condition beyond what it was at the time of the accident.
The Ombudsman gives examples of real-life situations in which insurers and their customers have disagreed over exactly these points.
In one case, the Ombudsman found in an insurer’s favour after it refused to foot the bills for the repair of a vehicle already suffering from serious corrosion.
The car had been hit while it was parked, but the owner’s insurer said that in order to repair the collision damage, the corrosion would also have to be dealt with at a total cost of £3,000.
The company was unwilling to meet this bill, and offered its customer a £500 settlement to reflect the price of repairing solely the damage from the crash.
Another case shows how insurers may try to avoid payouts by claiming that problems related to a vehicle existed before any accident.
In this instance, a woman collided with a car ahead of her and arranged for repairs to be carried out through her own insurer.
Cause of the problem
Following the repairs, however, her engine started making an unusual noise which she hadn’t been aware of before the accident.
But her insurer’s assessor said the problem was unrelated to the prang and refused to fix it, leaving the woman to pay her own mechanic to sort the matter out.
In this case, the Ombudsman found in the customer’s favour. It said the insurer had failed to explain what caused the engine issue or show that it was unrelated to the accident.
The company was forced to cover the cost of the extra work and pay £150 compensation on top.
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