The following case study is from the Financial Ombudsman Service and reference to a low insurance settlement offered to an insured party as it was processed without VAT after a van was written off in an accident.
Malcolm’s insurer offered him trade value for his van that had been written off, but they didn’t add VAT. He thought this was unfair, so he asked us to consider his complaint.
What happened
Malcolm thought the settlement he was offered after his van was written off in accident was unfair. His insurer told him they had paid the trade value for the van, but Malcolm thought they should add on VAT. Malcom raised a complaint with his insurer. The insurer said in its final response letter they paid the correct value, so Malcom contacted our service and asked us to investigate his complaint.
What we said
We checked the various trade guides to see whether the valuation was reasonable and found it matched the values given by the guides. However, as a commercial vehicle Malcolm’s van would be liable to VAT. So when we checked if he was VAT registered, we found that he was. We didn’t uphold Malcom’s complaint. We explained to Malcolm the valuation was in line with the trade guides. Although he would have to pay VAT on a replacement van, he could reclaim this through his VAT return. This meant that his insurer only needed to pay the value of the van excluding VAT.
About the Financial Ombudsman Service
Over a million people each year go to the FOS (Financial Ombudsman Service) If as a customer, people can’t resolve a complaint themselves. The FOS will give an unbiased answer about what has happened and if they decide someone has been treated unfairly, they can use their legal powers to put things right.
About ACHL
The Accident Claim Helpline is a dedicated vehicle accident department at Exclusive Law. Every month we assist thousands of people whom have been involved in a traffic accident and whom wish to get No Win No Fee advice which is independent from their insurer.
If you have been involved in a traffic accident and it was not your fault, having a lawyer on your side can help you get the correct settlement to your specific needs.
Whilst the majority of accident claims with insurers are thankfully trouble free, the Financial Ombudsman Service receives thousands of complaints each year about car and motorbike insurance, which is some 25% of all complaints about insurance products.
The FSO case study detailed here in respect of a low insurance settlement following a claim is unfortunately not an isolated incident.
(source: https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/settlement-offered-without-vat-van-written-off-accident)