Insurance firms are ripping off customers by undervaluing cars and other items when settling claims.
The Financial Conduct Authority (FCA) said it has seen evidence that some people left with written-off cars are being offered a price lower than the vehicle’s fair market value by their insurer.
Rip-off: Those who think their claim may have been undervalued can complain to their insurer and then to the Financial Ombudsman Service if their complaint is not resolved
In some cases, only a complaint will result in a higher offer, the regulator said. Offering a price lower than fair market value is not allowed under FCA rules.
Sheldon Mills, at the FCA, said: ‘This is especially important now as people struggling with the cost of living will be hit in the pocket at precisely the time they can ill afford it. We are watching the behaviour of firms closely and will act quickly to stop firms and prevent harm to consumers where we see it.’
Those who think their claim may have been undervalued can complain to their insurer and then to the Financial Ombudsman Service if their complaint is not resolved.
Firms can offer cash instead of repair or replacement but settling claims this way may sometimes not be in the consumer’s best interest if they are not able to easily arrange repairs or replace an item, or if inflation means they lose out in real terms, the FCA said.
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