Upheld: unfair salvage deduction on total loss settlement complaint against Tradex Insurance Company PLC
Financial Ombudsman decision DRN-6253415 of 2026-04-13T00:00:00+00:00. unfair salvage deduction on total loss settlement complaint against Tradex Insurance Company PLC. Outcome: Upheld.
Decision detail
| Reference | DRN-6253415 |
|---|---|
| Decision date | 2026-04-13T00:00:00+00:00 |
| Firm | Tradex Insurance Company PLC |
| Product | motor insurance |
| Claim type | unfair salvage deduction on total loss settlement |
| Outcome | Upheld |
| Remedy | Tradex must pay Mr R the difference between the 45% deduction it charged and the lower percentage (XX%) shown in its salvage agent fee table, plus 8% simple interest per annum from the date of original settlement to the date of payment |
Summary
Mr R complained that Tradex charged him an excessive salvage deduction of £7,695.90 (45% of vehicle value) to keep his car after it was deemed a total loss, whereas the third party insurer had offered a lower salvage charge of £3,420.40. The ombudsman found that while salvage deductions are fair in principle to prevent betterment and compensate insurers for lost salvage fees, the deduction should only equal the actual fee the insurer loses from its salvage agent. Tradex's own evidence revealed it receives a lower percentage fee from its salvage agent when policyholders do not retain vehicles, and this lower figure is a flat fee unrelated to auction proceeds. The ombudsman upheld the complaint and ordered Tradex to refund the difference between the 45% deduction and the lower percentage, plus interest.
The Ombudsman's reasoning
The ombudsman established that salvage deductions are fair in principle to prevent betterment and compensate insurers for lost salvage fees. However, the deduction should only equal the actual loss the insurer suffers - the fee it would receive from its salvage agent. Tradex's own evidence showed it receives a lower flat-rate percentage from its salvage agent regardless of auction proceeds. The 45% deduction appears to be based on predicted auction values rather than the actual fee Tradex loses, which is the only legitimate basis for the deduction. The ombudsman rejected Tradex's betterment argument as it was based on assumptions about policyholder behaviour that were not substantiated.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Tradex Insurance Company PLC, all decisions | 83 | 55% |
Source
Read the original decision on the Financial Ombudsman Service website