Weeks after motor insurers were told not to undervalue cars when settling claims, some firms are being accused of writing off cars that until recently they might have repaired.
The issue concerns motorists involved in an accident that wasn’t their fault, known as a non-fault accident. In such a case, a driver can ask for a credit-hire car to use while their own vehicle is repaired. Unlike a basic courtesy car, a credit-hire car can be a model similar to the insured driver’s vehicle.
This makes it more expensive, a cost that’s borne by the other driver’s insurer, assuming it accepts liability.
Rates agreed by most credit-hire companies have increased due to what they describe as “headwinds in the motor supply chain”, now ranging from £36 per day for a Citroën C1 to £450 per day for a Mercedes-AMG GT S. Companies that set their own rates can charge up to four times as much.
Before those “headwinds” began blowing, vehicle repair times were usually measured in a few weeks.
Today, the shortage of spare parts and reductions in the number of bodyshops that repair crashed cars means they can now stretch to months, in the process exposing third-party insurers to potentially high credit-hire bills.
As a consequence, rather than having them repaired, some third-party insurers are offering to buy damaged cars from non-fault motorists, in the process writing them off before then selling them to salvage firms, which are currently paying high prices.
“It’s apparent that where they can’t be repaired for several months, some insurers are offering to buy and write off the cars of non-fault drivers, so saving themselves a fortune in daily credit-hire charges, before recovering some of their costs when they sell the car for salvage,” said Tim Kelly, founder of Motor Claim Guru, an insurance advocacy specialist.
Brian Lennon, director of Castle Coachworks, a major vehicle bodyshop in Northampton, agrees that the repair delays that are fuelling the practice are a serious issue in the industry.
“We have 12 repair jobs that we’re unable to progress due to parts still being on back order,” he said. “Across the industry, there are fewer bodyshops, causing more repair delays. I’m under the impression that for these reasons, insurers are writing off vehicles rather than having them repaired.”
In its latest bulletin, published this month, the Association of British Insurers (ABI) reported that 40% of vehicle repair work was being affected by parts delays and courtesy car costs to repairers had increased by 30%.
Responding to the claims that these and other factors are causing some third-party insurers to write off cars rather than risk paying a large sum for a credit-hire vehicle, an ABI spokesman said: “Motor insurers are facing significant challenges due to inflation, supply-chain disruption and global shortages and are doing all they can to manage the impact on customers.