Upheld: unfair settlement valuation for total loss motor insurance claim complaint against First Central Underwriting Limited
Financial Ombudsman decision DRN-6415266 of 2026-06-09T00:00:00+00:00. unfair settlement valuation for total loss motor insurance claim complaint against First Central Underwriting Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6415266 |
|---|---|
| Decision date | 2026-06-09T00:00:00+00:00 |
| Firm | First Central Underwriting Limited |
| Product | Motor insurance |
| Claim type | unfair settlement valuation for total loss motor insurance claim |
| Outcome | Upheld |
| Remedy | First Central Underwriting Limited must: (1) settle Miss S's claim for a total of £4,781; (2) pay 8% simple interest on the unpaid part from the date the initial payment was made until full payment; (3) pay Miss S £100 compensation for inconvenience and frustration caused. |
Summary
Miss S complained about First Central's settlement offer of £4,292 for her car following a total loss claim. She disputed the valuation and provided evidence of comparable vehicles advertised at higher prices. First Central increased its offer to £4,292 (the highest trade guide valuation) but refused to increase it further. The ombudsman upheld the complaint, finding that while trade guides are persuasive, the contemporaneous advertisements for comparable vehicles showed an average price of £4,781. The ombudsman determined that indemnity insurance requires the settlement to enable the policyholder to purchase a comparable replacement, and ordered First Central to pay £4,781 plus 8% interest and £100 compensation for inconvenience.
The Ombudsman's reasoning
The ombudsman applied the principle that indemnity insurance should put the policyholder back in the position they were in before the loss. While trade guides are persuasive, the ombudsman also considered contemporaneous advertisements for comparable vehicles. Three advertisements from near the time of loss showed comparable cars priced at £4,790, £4,995, and £4,599—all significantly higher than First Central's £4,292 offer. The average of these comparable advertisements (£4,781) provided a more accurate reflection of the actual market value at the time of loss than the trade guides alone. First Central's settlement was insufficient to allow Miss S to purchase a comparable replacement vehicle.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| First Central Underwriting Limited, all decisions | 204 | 42% |
| Motor insurance, all decisions | 23,874 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website