Hi,
I am unsure where I stand legally here, but I think I might have a case as it just seems wrong. Looking for some advice on whether I can push this successfully or not with AFCA (the governing body for car insurance).
I had a fully comp policy on my car. I had an accidental which was my fault, and the car was considered an economical total loss. The car was a security on a loan (the loan was taken out to buy the car).
The insurance company offered a payout for market value. They told me that they would have to pay off my loan first and I would get the remainder. I KNOW the laws around this, and I am not seeking advice on this, I fully understand that they must pay the loan company to release the security on it so they can sell it as salvage. Here is my issue:
When I took out the loan 2 years ago, I had a really good interest rate (~4.5%). As we all know, inflation has gone through the roof. So now, to get my new car, I need a new loan which is minimum 6.8%. My reasoning is that, if they chose to repair the car instead, I would be in the same financial position as I was before the accident. Now however, I will be financially disadvantaged, as I need to take a new loan out at a significantly higher interest rate.
I raised this with my insurance company and asked if they could give some extra cash to compensate this. You probably know how that went. But the more I think about it, the more I think I might have a case. My main argument is that they had a choice, hence me emphasising that it was deemed an economical total loss above.
As I understand it, an economical write off is a decision they make because it is not in their financial interest to repair it. So, from my perspective they did not have to write it off, they could have repaired it. But because they chose to write it off, and they required the car as salvage, they had to pay off my loan. So, ultimately they made a choice which financially disadvantaged because it financially advantaged them. This doesn’t seem right to me. I want to be clear that if this was statutory write off (meaning it is unsafe to drive), then I would not be pushing this; in this case, it wouldn’t be that they are choosing money over looking after their client, it is that it is the law and it has to be written off. I am all for them saving costs where they can, but if this is their sole reason for doing so, and I end up losing out, I would hope there is some law in place that states they must compensate me if they choose this path.
I did some reading on the net, but there is no advice around my particular situation. I did find something on a lawyer’s website stating that the decisions an insurance company make during a claim must be in the best interest of the client and honourable. It doesn’t seem the case here. Any thoughts or advice on whether I could push this? It’s probably never been done before, but that’s only because most people don’t want to take the risk going to court as it’s a case of David vs the Goliath.
thanks
I am unsure where I stand legally here, but I think I might have a case as it just seems wrong. Looking for some advice on whether I can push this successfully or not with AFCA (the governing body for car insurance).
I had a fully comp policy on my car. I had an accidental which was my fault, and the car was considered an economical total loss. The car was a security on a loan (the loan was taken out to buy the car).
The insurance company offered a payout for market value. They told me that they would have to pay off my loan first and I would get the remainder. I KNOW the laws around this, and I am not seeking advice on this, I fully understand that they must pay the loan company to release the security on it so they can sell it as salvage. Here is my issue:
When I took out the loan 2 years ago, I had a really good interest rate (~4.5%). As we all know, inflation has gone through the roof. So now, to get my new car, I need a new loan which is minimum 6.8%. My reasoning is that, if they chose to repair the car instead, I would be in the same financial position as I was before the accident. Now however, I will be financially disadvantaged, as I need to take a new loan out at a significantly higher interest rate.
I raised this with my insurance company and asked if they could give some extra cash to compensate this. You probably know how that went. But the more I think about it, the more I think I might have a case. My main argument is that they had a choice, hence me emphasising that it was deemed an economical total loss above.
As I understand it, an economical write off is a decision they make because it is not in their financial interest to repair it. So, from my perspective they did not have to write it off, they could have repaired it. But because they chose to write it off, and they required the car as salvage, they had to pay off my loan. So, ultimately they made a choice which financially disadvantaged because it financially advantaged them. This doesn’t seem right to me. I want to be clear that if this was statutory write off (meaning it is unsafe to drive), then I would not be pushing this; in this case, it wouldn’t be that they are choosing money over looking after their client, it is that it is the law and it has to be written off. I am all for them saving costs where they can, but if this is their sole reason for doing so, and I end up losing out, I would hope there is some law in place that states they must compensate me if they choose this path.
I did some reading on the net, but there is no advice around my particular situation. I did find something on a lawyer’s website stating that the decisions an insurance company make during a claim must be in the best interest of the client and honourable. It doesn’t seem the case here. Any thoughts or advice on whether I could push this? It’s probably never been done before, but that’s only because most people don’t want to take the risk going to court as it’s a case of David vs the Goliath.
thanks
