I'm crushed after car was scrapped without warning

I WAS the innocent victim of a car accident some months ago, since when I have been in dispute with the insurance companies involved over their settlement of the claim, leaving me disenchanted by their treatment.

I was hit by a car from behind, my very first accident in over 50 years of driving. Fortunately I wasn't injured, but the accident broke the lights and smashed the number plate as well as denting the rear bumper and boot. When I spoke to the garage, the staff there told me that the car was repairable without too much problem.

However, rather than repair the car, the insurer sent me a cheque for less than 2,000, which I was really shocked at. Although the car is 12 years old, it was in immaculate condition and still has less than 15,000 miles on the milometer.

I believed I was entitled to it being replaced with a new car of equivalent quality. Surely that's what insurance is for?

The insurance company told me that because the cost of repairing the car was more than the car is worth it is a write-off. The cheque represented what they said was the 'market value' of my car. I refused to accept the cheque and phoned them for an explanation – but to my horror they said that the car had been disposed of. I certainly never gave my consent for that to happen so I am left with no car and paltry compensation for all of this inconvenience and upset.

The company admits it made a mistake when it disposed of my lovely car, but it still says that it has offered a fair price for it. I believe that they should at least replace the car with a new equivalent, which I estimate to be in the order of 24,000. What should I do now? Can the insurance company get away with this?

A M, Dunoon

Ian Crowder, AA Insurance manager, writes:

THIS is an unhappy tale and, to be honest, customers with older cars often feel that the value offered following an accident is inadequate.

However, the basic principle of car insurance is to cover the value of your vehicle at the time of the loss. It is only in the case of the total loss of a new car (up to one or two years, depending on the insurer) that the vehicle may be replaced with a new one.

An older car is, of course, subject to depreciation and wear and tear, no matter how well the owner looks after it, and insurance won't cover that. In other words, insurance isn't there to give you back something that is 'better' than the vehicle that has been lost.

However, there are some practical things that owners of older cars can consider. For example, if the car is written off but roadworthy and legal, according to an insurance company assessor, then it is possible to negotiate the value of the vehicle with the insurer but retain the salvage, as the car will be described. The owner can then arrange for the repair themselves.

But, from the damage you describe, it may be that the insurer considered your car beyond repair – there may have been hidden structural damage that wasn't obvious.

The insurer should offer you its current market value. This means that with the money you receive, you should be able to buy a similar model of similar age and condition with the payment.

If you don't believe the money offered matches its current market value, you can gather evidence to confirm its true value. This could include evidence from online car valuation sites such as Parkers as well as advertisements in newspapers or car magazines. There are countless websites too that offer cars for sale – you should be able to search by model and age to find out what such cars are being sold for. Take this evidence and write to your insurer pointing out that similar cars to yours are fetching higher prices.

Finally, let me pick up your last point. The insurer should not have disposed of your car without your express permission and should have made you an offer first. You should write a formal letter of complaint pointing that out.

Also, if there is a shortfall in the market value they have offered, you should point that out too, enclosing the evidence that I have described.

If you feel the subsequent offer made by the insurer is inadequate you can ask the Financial Ombudsman to review the case (your insurer will give you the address).

This really is a last resort: the Ombudsman's role is to take an independent view of the circumstances of your complaint. If he upholds your complaint you can expect to hear further from the insurer. But if he believes that the insurer has dealt with you fairly, he will tell you so, explaining why – and that, unfortunately, will be the end of the matter.