Upheld: claim settlement valuation and claim handling delays complaint against Arch Insurance (UK) Limited

Decision detail

Summary

T Ltd, a motor trader, claimed under its motor trade insurance policy with Arch for seven vehicles damaged when a third party crashed into its premises. Arch settled one written-off vehicle at £18,045 based on motor trade price guides, but T Ltd argued it should receive £19,251.76 (the £18,300 it paid for the vehicle three months earlier plus £951.76 in improvements). The ombudsman upheld the complaint, finding that T Ltd's recent purchase price provided more reliable evidence of actual trade value than averaged price guides, and that the improvements increased the vehicle's replacement value. Arch was ordered to pay the £1,206.76 shortfall plus interest, £400 for storage inconvenience, and £200 for delays.

The Ombudsman's reasoning

The ombudsman determined that while motor trade price guides are normally persuasive, they represent averaged figures from various sales and do not necessarily reflect the actual value of a specific vehicle. The fact that T Ltd purchased the identical vehicle at auction for £18,300 only three months before the loss provided reliable evidence of its actual trade value at the time of loss. Additionally, the improvements T Ltd made to the vehicle (new tyres, alloy refurbishment, bumper repair) increased its value and should be included in the replacement cost, as T Ltd would need to spend this amount to replace the car in the same condition. The ombudsman stressed this does not create a general precedent but was reasonable in these particular circumstances given the policy terms and specific facts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website