FCA warns insurers over undervaluing car claims

This FCA report doesn’t surprise me in the slightest. Many insurers have tried to get away with the lowest valuations possible as long as cars have been on the road, and that will likely continue. But right now, with the cost of living crisis in full swing, the impact of undervaluing cars on consumers can be particularly harsh. It’s more important than ever that people are really proactive if they have made a claim and demand that insurers explain how they have arrived at the figure they have. This is all the more the case given that the value of second hand cars has risen considerably since the pandemic.

This FCA warning is a shame but i am actually not surprised. During my time at the Financial Ombudsman I dealt with various complaints where customers felt their car had been undervalued. However when receiving these insurance valuations, customers do have options. 1. Customers can do their own research online through the likes of auto trader to check what their car should be valued at, this would be a good sense check to compare to the figure given by the insurer. 2. Customers can complain to the insurer and request where the valuation was obtained from. This would assist them in knowing how the insurer evidenced this amount and understand how the valuation was justified. 3. In the event they still aren't satisfied, the case can be taken up with the Financial Ombudsman Service, who would look into the insurers reason for the valuation they gave. The Ombudsman are efficient with these cases as they use 3rd party databases such as Glasses, Parkers & CAPS to verify the car value. 4. Should the customer not be satisfied with the Ombudsman answer, the final step would be to take legal action. Most cases don't get to this stage but it is an option should the customer still feel the case hasn't been rightfully justified.