Odd Insurance Scenario

[Stevo309 0]

I came across a situation the other day regarding insurance and despite working in insurance myself previously and also being at the wrong end of a couple of claims I have had my eyes opened on this one and thought it might be worth sharing...

 

A friend of mine was on the motorway and had to brake for traffic. The car behind hit him. The damage was fairly minor with bumper damage, pretty much cosmetic and the car that hit him had a bust front end, burst rad etc. My mate's car is a 406 HDI and the car behind a Saxo. Anyway the young driver of the car behind said he wanted to pay cash for the damage caused and not go through insurance. My friend was ok with this and got a repair quote of £800. The garage quoting were planning to fit a new bumper, new trim, basically everything needed but the car is only worth £500 approx. The young guy haggled and offered £500 as he pointed out that is what the car is worth. My friend has reluctantly accepted knowing that actually he could have the bumper blown over or put the cash in his pocket and live with the damage.

 

Now here's the twist. The young guy now says he can't come up with the cash, my mate has issued a deadline and asked him to either pay up or it'll go through insurance. He's quite keen to do it cash though if possible as he doesn't want the car writing off due to the fact that he has always kept it very well serviced and would struggle to replace it for £500 with a reliable equivalent.

 

I spoke to another friend of mine at the weekend about this and he's a motor insurance assessor (which is handy) and he said that because the blame is 100% against the young driver my friend can make a claim to his insurance company. Because there is no contract in place between my friend and the third party insurance company they cannot write the car off or take it away so my friend can ask for a cash settlement from the insurer. The best part about this is also the fact that they will pay cash direct as well and don't actually care if you then spend it on repairing the car or not. They actually see it as "compensation" for the accident.

 

Up until now i had no idea that it worked in this way and assumed that insurance payouts were always against repair invoices. When they make a cash offer they will of course take into account the value of the car, the cost of repair and go in lower but it could be a nice little bonus for my mate.

[stufarri 98 3 Cars]

It is what is known as a cash-in-lieu (of repair) settlement and is common practice in the industry for the settlement of third party claims.

 

Insurers will try to force a repair as they control their own repairers and hence save money controlling the repair but they will settle on a cash basis once the car has been inspected by an engineer. This won't happen if the vehicle cannot be repaired or there is danger that the car can be bodged and made roadworthy again. Often or not they will settle the claim as a total loss and claim the salvage remains to sell on.

 

Insurance - exciting stuff eh........................

[GLPoomobile 958]

Without wanting to go off on a tangent, I have a sort of similar story.

 

I crashed my old Civic by driving over a blind drop of some 3 feet tall, which left the car suspended at 45 degress perched on the edge of what I'd describe as a ledge. This happened in a car park on a housing estate. Although I was only TPFT, I was able to use my insurers legal dept to pursue a claim from the land owner's insurers, on the basis of negligence on their part - the drop was not sign posted or barriered in any way following the demolision of the garages that had stood there before (the residents who helped me remove the car that day said they knew it was only a matter of time before it happened).

 

So anyway, I eventually took a cheque for £400 (IIRC). But so far as I'm aware, nothing ever happened with regards to the car being Cat D, C, or whatever. I certainly wasn't informed as such. I just scrapped it anyway and moved on. But it was a bit of a weird scenario, and I'm so glad it's over 5 years ago now, as I hated having to explain it every year when shopping for quotes!

[Henry Yorke 269 3 Cars]

I took cash in lieu for a 306 with very light front damage which they did want to repair. I put a new bonnet and bumper on and had to get it MOT's to say it was road worthy again

[P_Monty 2]

That's interesting.

A little while back someone ran into the back of my 205. I reported it to my insurers an told them I wanted to make a claim against the other guy - they sent round an assessor to see if my car "was worth repairing" (fortunately it was). So should I have gone direct to the other guys insurance and told mine later after it was all sorted???