A comprehensive loss

Full cover for an old car may not be worth the price of the premium. Dido Sandler reports

LAST WEEK was an unhappy one for Steve Perrett. It all started when his car was almost forced off the road by a lorry, which then rammed him twice, and chased him at high speed down London's Embankment. When Mr Perrett stopped at the lights, he was attacked in his car by one of his pursuers, who was wielding a baseball bat and threatened to kill him.

Mr Perrett's car was badly damaged by the attack. Luckily he had been wearing sunglasses, so his eyes were protected from flying glass. But he did suffer from extensive cuts.

In some shock, and still nursing his wounds, Mr Perrett contacted his insurer to make a claim. Privilege Insurance - the non-standard risks specialist - sent an engineer to value Mr Perrett's 1979 Mercedes. They gave it a pre-accident price of pounds 750, and the company decided the vehicle was not worth repairing. The company then offered the victim pounds 250 - the difference between the pounds 500 excess he had agreed to pay himself in the case of accident, and the pounds 750 valuation from the engineer.

This was a new blow for Mr Perrett, who had insured his car on comprehensive terms to the value of pounds 1,000. "Because of a disqualification, I paid a very high premium of pounds 1,106. Now I find when I have this terrible accident and I come to claim, I'm denied the cover we agreed. It's a real con," he said.

Mr Perrett also realised in hindsight that, with the write-off value so low, fully comprehensive insurance just was not worth it. Third party, fire and theft would have cost him only pounds 650. He is angry that this was not pointed out to him when he bought his policy. "With an insurer as established as this, it shouldn't merely be a case of caveat emptor. That's spiv's talk."

Privilege said it already provided the best value and service in the market. It claims Mr Perrett paid pounds 400 less than the next quote. It also provided him with a courtesy car.

Mr Perrett said this was not enough. After he contacted the Independent on Sunday, Privilege relented and will now send him the full pounds 500. Furthermore, it has offered to transfer the insurance to another vehicle, or the Mercedes if Mr Perrett chooses to rebuild it, and refund the difference between the cost of comprehensive and third-party cover, some pounds 350.

Privilege, it seems, with its low offer, was well within its rights.

According to Michael Lovegrove of the Insurance Ombudsman's Bureau, when some- one writes off a car in an accident, insurers' standard practice is to pay either the market value immediately before the loss, or the policy holder's latest stated valuation, whichever is the lower. The main exception is with agreed-value policies, purchased usually for classic cars.

With standard policies, the insurer appoints an engineer to assess the value before the ac- cident, which is based around retail prices in Glass's Guide, the trade second-hand guide.

"When determining the premium, people don't realise that the value they state on the proposal form is not particularly relevant. The premium is hardly affected by the value. More important is the type of car, and the age, experience, and driving history of the insured," Mr Lovegrove said. He added, however, that if the insured's assessment was considerably lower than the market value, most insurers would bring the sum up to the market value. The Ombudsman takes a dim view of those insurers who do not.

However, if claimants still feel they have been unfairly treated, and that they are not being offered a fair sum, they should start by complaining to the insurer. It will help the case to present evidence to demonstrate the claimed value - for example prices of similar vehicles from publications such as Exchange and Mart.

If complaints do not get satisfaction, they should get in touch with the Insurance Ombudsman's Bureau.

Mr Lovegrove added that an insurance broker might have been prepared to give Mr Perrett advice about whether a fully comprehensive policy was worthwhile, whereas Privilege did not. The company is a direct insurer that offers its own products only. Conversely, direct insurers often offer more competitive prices than brokers.

The best advice to the customer to shop around for advice as well as quotes.