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Context: In the UK. We recently touched another car on the road, resulting in a minor scratch on our car. We were responsible and told this to the insurance. The car is small and old (low value).

Then this happened: We get a call by the insurance to say that the car was deemed a total loss (based on photos), as the cost of repair was deemed higher than the estimated market value of the car. They demanded to know where the car was so they could have it collected for salvage.

We were a bit caught off guard and wanted to know what could be done to retain the car, as (apart from the scratches) it is fine. The insurance person said that in this case they needed an immediate MOT certification within 2 weeks, otherwise the car would be sold for salvage. We now got the MOT passed - it was not due yet so this is additional cost.

The insurance then said it would pay the market value of the car minus some deductions (=settlement amount) rather than paying for repairs - because for some reason they seemed to think the repairs would be more expensive than the car (which is false). They said we can keep the car now AND the settlement amount.

Question 1: Can insurance companies just take away cars like they implied? They really wanted to know where it was without asking for permission.

Question 2: Now with this settlement payment (they confirmed the amount in writing, so we assume they will pay), are there implications such as: Can they still take away the car later? Will they pay in case of future damages?

Question 3: This behavior by the insurance to pay more than the cost of repair seems odd. Is this common or why are they doing this?

Question 4: Should we switch insurance companies? The way they put us under pressure was not at all nice.

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    Insurance companies have policies about standards they will conduct repairs to. For example even fixing a minor scratch often involves a complete repaint of a panel, maybe more than one. For a cheap car, with a quote from an approved workshop that knows it is doing work from an insurance company (and thus quoting high), it's easy for the quote to exceed the car value. A fix that is acceptable to you can often be done much cheaper.
    – DJClayworth
    Commented Jun 27 at 15:58
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    More and more, when a company does something that doesn't seem to make sense, I think we need to consider that they may be using AI.
    – JimmyJames
    Commented Jun 27 at 20:52
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    Your insurance company believes you are making an insurance claim for damage to the car and looking to them for repairs or a payout. If that is not the case, then you should correct your misunderstanding. Separately, they are inferring that the car took damage, and since they don't want to insure a damaged car, they need you to show it is safe to drive. Thirdly, they may also have government incentives to flog you out of a smoggy guzzling junker.
    – Harper - Reinstate Monica
    Commented Jun 28 at 5:05
  • @JimmyJames, the administrators making those decisions may simply have no sense, rather than be aquiesing to the AI.
    – civitas
    Commented Jun 28 at 23:02
  • This is a really interesting situation to Yanks, where we have the opposite problem. Insurance companies here designate the cheapest cut-rate collision repair shops as "approved repair facilities" where they pay less than 1/4 of the hourly labor rate required for mechanical repairs and only approve the cheapest repair parts made by cheap aftermarket suppliers. Collision shops sometimes transition themselves to being regular mechanics for the benefits of not dealing with insurance company labor rates.
    – Aldus Bumblebore
    Commented Jun 29 at 0:48

4 Answers 4

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Question 1: Can insurance companies just take away cars like they implied? They really wanted to know where it was without asking for permission.

Yes, you're giving them the car in return to the money. How would they take it if they don't know where it is?

Question 2: Now with this settlement payment (they confirmed the amount in writing, so we assume they will pay), are there implications such as: Can they still take away the car later? Will they pay in case of future damages?

You'll need to ask them. I would imagine that the policy is now canceled once the settlement is done and you'll need to issue a new policy to cover future damages. They might refuse to issue it given they deem the car total loss.

Question 3: This behavior by the insurance to pay more than the cost of repair seems odd. Is this common or why are they doing this?

They're paying what they think they should. If it's more than what you think they should - you can tell them to pay less, obviously. They don't shop around for quotes, they have their approve price list for each repair which may or may not be what the repair shop quoted to you.

Question 4: Should we switch insurance companies? The way they put us under pressure was not at all nice.

That's up to you, really, but sounds like you've gotten a pretty sweet deal - you got to keep the car, costs of repairs covered, and some change left.

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    Thanks, this puts things into perspective! Still can't believe they would just write the car off when we told them there were just scratches. Yes, it's a sweet deal, and it seemed too good to be true (despite the pushy and nonresponsive insurance person on the phone), hence the question.
    – Nameless
    Commented Jun 27 at 8:46
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    @Nameless you have a claim for repair of the scratches and can force them to repair the scratches (fully repairing, not just covering or so) - unless there is an exemption, for example that the repair costs more than the value of the car. They determined that was the case. That's it. Whether you prefer to drive the car with scratches instead of repairing them is non of their business.
    – DonQuiKong
    Commented Jun 27 at 12:34
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    This answer seems defective. I read the question as though insurance was trying to claim the right to collect and sell the car before any settlement was agreed upon; which to me seems bogus. There's a definite disagreement in the value of the car here that's much larger than the repair cost.
    – Joshua
    Commented Jun 27 at 17:27
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    @Joshua the insurance company assumed the insured would just take the money, once the insured clarified they're not interested in getting rid of the car the insurance company acted appropriately. This is more of a miscommunication and misunderstanding issue than the insurance doing something nefarious. Sure, they could have been clearer and their bedside manners are lacking, but your interpretation is extremely unlikely.
    – littleadv
    Commented Jun 27 at 17:37
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    @Mavrik but they did offer the OP the market value (minus some fees). I can assure you, whatever they could have gotten in an auction is less than the retail market value they paid. They do sell them for salvage (= for parts/scrap metal), but they don't make much profit off of that.
    – littleadv
    Commented Jun 27 at 23:58
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I think claims are being inflated due to lack of regulation and enforcement. Not sure it is legit, but it appears to currently be a done thing through murkiness of subcontracting. Some quotes from a Guardian article about it:

We have seen examples of how accident claims management companies are routinely charging £5,000 to provide replacement cars to victims of accidents. We have been told about repairs that it seems should have cost £1,500 to fix but have actually resulted in £15,000 insurance payouts.

Minor repairs are inflated because the work is being paid by an insurer, one insider claims.

.. letters suggest that this over-paying and excessive charging has become the norm across an industry that appears to have lost control of claims.

Arguably worst of all, from an environmental perspective, perfectly good cars are being unnecessarily written off on the say-so of insurers that have not examined the car.

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  • Thanks, the article mentions some cases similar to ours. Wow.
    – Nameless
    Commented Jun 27 at 11:52
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    Relevant XKCD (more or less).
    – gerrit
    Commented Jun 28 at 6:23
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    This is kind of like the way prescription medications are overpriced in the US, because it's usually insurance companies paying for them.
    – Barmar
    Commented Jun 28 at 15:59
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    Prescription medications are overpriced in the US because it's usually the Federal government who's paying for them (through Medicare), and the Federal government is legally barred from negotiating prices (thanks, Republicans!)
    – littleadv
    Commented Jun 28 at 17:16
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    @Barmar The plan administrator ("insurance" company) negotiates with providers, but ultimately the employer has the final say on what they cover. Also, pharmacy plans are usually separate from the medical administrator, it's through a separate pharmacy benefits administrator which the employer choses. What you're referring to is Medicaid "best price", not Medicare. There was an attempt to extend that to Medicare Part B drugs, but failed due to a lawsuit in 2021.
    – user71659
    Commented Jun 28 at 21:46
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The crux of insurance is to "make you whole".

Suppose I have a 2017 Tesla Model S 75 kWH with 120,000 miles and an interior condition of 7. And I smash it.

Insurance owes me a 2017 Tesla Model S 75 kWH with 120,000 miles and interior condition of 7. They can get there two ways:

  • Spend X to repair the car I already own
  • Spend Y to buy me another 2017 Model S of same condition.

They will rationally do the cheaper one based on their repair and used-car data.

Because of this, paying collision and fire/theft insurance on a low value beater is often unwise. The difficulty is realizing when you turned the corner.

They will not actually buy me another 2017 Tesla Model S 75 kWH with 120,000 miles and interior condition of 7. It would be too difficult to find one, and I would not appreciate it anyway, since I really hoped to put the payout toward a 2022. So the insurer will give a cash payout instead, at which point my car belongs to them. That makes perfect sense because who wants a wrecked car lying around their property, and they are entitled to its residual value.

If that is not appropriate, it's perfectly acceptable to ask them to do something else and let you keep the old car for whatever your purposes may be. If they are going to continue to insure it, they will want to know it is safe.

because for some reason they seemed to think the repairs would be more expensive than the car (which is false).

Not false. They only work with first-rate shops for liability reasons. Thus, they are more expensive than you are expecting to pay.

Question 1: Can insurance companies just take away cars like they implied? They really wanted to know where it was without asking for permission.

I gather that you contacted the insurer merely to give them legal notice of the accident? They may be moving quickly and not really pausing to ask what you want. They are under the impression that you are trying to file a damage claim, because why else would you be talking to them? They are trying to payout your claim. If that is wrong, you need to talk to them.

Question 2: Now with this settlement payment (they confirmed the amount in writing, so we assume they will pay), are there implications such as: Can they still take away the car later? Will they pay in case of future damages?

Typically a "total" offer requires handover (and includes removal) of the car. Normally when collecting a totaled car, it was towed off the motorway to a storage yard. They expect to go there, pick up your car, and settle your tow and storage fees on your behalf. That's all they need to payout a claim.

If you have the car, you either tell them your address and they collect it, or drive/tow it to their depot, at which point they release the cheque.

If you want to keep the car, you need to have that conversation with them. That will probably change the payout.

Obviously, they will not pay a second time for the repair you did not do, unless you get hit there again and it's much worse.

If your car is a beater, it is sheer madness to keep paying collision and theft insurance.

Question 3: This behavior by the insurance to pay more than the cost of repair seems odd. Is this common or why are they doing this?

Seems odd to me as well. If "repair" > "buy comparable car" you should get the lesser amount.

Maybe they are compensating you for not having to send a tow truck (the deal may be deliver it to them) or they are linking you into a government scrappage scheme where the government is paying to take it off the road.

Question 4: Should we switch insurance companies? The way they put us under pressure was not at all nice.

I would attribute that to inexperience with the process, and fair chance they're under-staffed and under-trained and moving fast and you both did not communicate well.

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  • Thanks. Just a small correction: The settlement amount they pay has already subtracted the amount they might get from scrapping the car. (So I think this means we can keep it, unlike in the case you describe, where they take the car to retrieve the salvage value.)
    – Nameless
    Commented Jun 28 at 8:58
  • They don't (generally) owe you the cost of getting a new one; they owe you the value lost on the old one — i.e. the price you could have sold it for.
    – fectin
    Commented Jun 28 at 13:19
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    My bad, "new" is confusing. "Replacement" is a better word anyway.
    – fectin
    Commented Jun 30 at 13:47
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When the car is declared a total loss, the estimated value just prior to the accident is paid out. That may be higher than the cost of repairs, but remember that the insurance company recovers the difference (or something close) by selling the car for scrap and salvage (a company they sell it to will part it out).

As an example, in 2007 my car was totaled in an accident. Repairs were estimated to be about 2000 Euro, the car was estimated at 2500 Euro, so that's what I got. The insurance company probably got more than 500 Euro for the wreck (the engine was good, as was the interior, all the damage was to the right rear area, especially the rear axle and mounts), so ended up saving a few hundred Euro.

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