Partially upheld: claim handling, valuation dispute, salvage deduction complaint against Marshmallow Insurance Limited

Decision detail

Summary

Ms M claimed on her motor insurance policy after her car was stolen in June 2025. Marshmallow initially valued the car at £22,495 but increased it to £27,271 after Ms M challenged the valuation. When the car was recovered, it was categorised as Category X total loss with a tampered VIN number. Marshmallow initially declined to let Ms M retain the car but later offered to do so with a 40% salvage deduction. Ms M disputed both the valuation and salvage deduction. The ombudsman found Marshmallow's valuation and salvage deduction were fair and reasonable, but upheld the complaint regarding poor claim handling with inconsistent advice and delayed responses, directing Marshmallow to pay £792.75 compensation.

The Ombudsman's reasoning

The ombudsman applied the principle that insurers should obtain multiple motor valuation guides and settle at the highest unless they can evidence a departure is fair. Marshmallow's updated valuation of £27,271 exceeded the initial guides and was supported by further market research, making it reasonable. The 40% salvage deduction was justified because Category X classifications (theft-related) typically attract higher salvage values than damage-related write-offs, and Marshmallow provided evidence supporting this commercial rate. However, the ombudsman found Marshmallow's claim handling fell short of regulatory standards requiring prompt and fair claims progression, causing unnecessary distress and inconvenience through inconsistent advice and delayed responses.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website