Not upheld: unfair settlement valuation and deduction for pre-existing damage complaint against First Central Underwriting Limited

Decision detail

Summary

Mr P complained about First Central's settlement of his motor insurance claim following a total loss. First Central valued the car at £1,485 (the highest of three valuation guides) and deducted £267.60 for pre-existing damage. Mr P disputed both the valuation and deduction, providing adverts of similar cars and arguing the settlement was insufficient. The ombudsman found the valuation fair as it aligned with the highest guide and the comparable adverts were not like-for-like. The ombudsman also found the pre-existing damage deduction reasonable based on First Central's supporting evidence, including photographs, a damage calculator, and engineer assessment, despite the use of a reduced labour rate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS standard approach for valuation disputes: where an insurer's valuation aligns with the highest valuation guide, it is generally considered fair unless persuasive evidence shows otherwise. First Central's valuation of £1,485 matched the highest guide. The adverts Mr P provided were not deemed like-for-like comparables. Regarding the pre-existing damage deduction, while First Central used a reduced labour rate below its normal rate, it provided supporting evidence (photographs, calculator assessment, engineer confirmation) demonstrating the deduction was reasonable and in line with FOS guidance of deducting 50% of repair costs.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website