Will your car cover leave you crushed if it’s a write-off?

Drivers risk being left empty-handed following car insurance claims if they have an accident – due to high excesses and low write-off valuations. The average cost of annual car insurance has risen in recent years, reaching £484.

Drivers aged 20 pay more than £900 on average while 40-year-olds typically need to find upwards of £330. Add in road tax and keeping a car on the road requires substantial capital.

Having invested so much, the least drivers would expect is a decent level of protection should they need to make an insurance claim. But buying, or renewing, the wrong policy could leave drivers in dire financial straits.

Shock: Modest repairs could mean a write-off

The Mail on Sunday has found examples of insurance excesses totalling £3,000, a sum exceeding the write-off value of some of the most popular cars on UK roads, meaning a zero payout.

The excess is the amount a policyholder must stump up in the event of a claim before the insurer steps in. If the car is a write-off, the excess is taken off its value and the difference paid to the policyholder.

Insurers typically define a write-off if repair costs exceed around 50 per cent of its market value, with the threshold a little higher for cheaper cars and lower for pricier models.

As the average car is eight years old, many common models such as the Ford Fiesta would be relatively low in value and classed as write-offs if involved in a collision. Despite paying a lot for insurance, a pay-out is unlikely where a £3,000 excess features.

This would be the case with an eight-year-old 1.5L Ford Fiesta Style. It has a forecourt value of between £3,440 and £3,775, meaning it may be a write-off if the repair bill topped £1,720.

Many drivers could not pay their excess 

Anders Nilsson of Go Compare

In a Moneysupermarket.com search for a 1.5L Ford Fiesta with 2012 plates, driven by a 40-year-old South Londoner, U Drive Cover, Complete Car Express, City Insurance, One Call Insurance, Brightside and BG Insurance all provided quotes with £3,000 excesses.

These quotes were not the cheapest, compounding the problem for any policyholder who needed to make a claim following damage or a write-off.

Anders Nilsson, of Go Compare, says this is a serious issue. He says: ‘Policy excesses are often misunderstood and can provide a nasty shock during a claim – a time when there is already enough stress to deal with.

‘Our research shows excesses could contribute to genuine financial hardship with 37 per cent of drivers admitting they don’t have the means to pay their excess or would have to turn to credit cards or loans.’

High excesses are not restricted to relatively cheap cars. According to car valuation experts Parkers, an eight-year-old BMW 3 Series has a dealership value of between £7,000 and £7,500, meaning a potential write-off value of £3,500 if the repair cut-off point is 50 per cent of the car’s value.

The average cost of annual car insurance has risen, reaching £484

The average cost of annual car insurance has risen, reaching £484

For a BMW 3 Series, driven by a 40-year-old from Stevenage, five of the 54 quotes given on Go Compare had a £3,000 compulsory excess.

This comparison website pays the first £250 of any excess, but that would still leave the insured needing to find up to £2,750 if they have a policy from U Drive Cover, Complete Car Express, Brightside, Brightside Blackbox or NCI Insurance.

In this case, the driver could receive only £500 following a write-off or a serious prang. This payout is nowhere near enough to cover repairs or insure a like-for-like replacement, let alone cover the cost of buying a new car.

The average car insurance claim is around £2,600, costly enough to make scrutinising for high excesses a priority. Go Compare’s Nilsson says this is not easy.

He says: ‘High excesses are not the preserve of certain providers, as you can get both low and high excesses being charged by the same insurer depending on the person they are quoting for.’ 

To make matters worse, insurers usually have agreements with salvage firms, meaning they are often reluctant to sell a written-off car back to the policyholder, even though this would go some way to mitigating losses.

As a result, many drivers are left with no option other than to buy a new car, which would cost far more than the repair and repurchase fees of the old one – even if this were possible.

Commenting on the practice of imposing £3,000 excesses, a spokesperson for the British Insurance Brokers’ Association said: ‘There could be a number of reasons.

‘For example, insurers may feel they need to provide quotes albeit with high premiums or excesses, rather than ‘no quote’ enquiries.’



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