Car Insurance Excess

[Hopkirk]

My sister in law had an accident recently, which was her fault.

To reduce the premium she had a high volutary excess on a comprehensive policy. The car was pretty old and not worth much.

The insurance company are saying that the car was worth less than the excess and they are demanding the difference be paid, presumably to put towards the cost of repairing the other persons car.

Can they do this?

[boxtops]

That's what I thought, TWR, although not so much the age, more the value at the time of asking for the higher excess.

[Arrods]

You can't be required to pay anything towards the cost of repairing the non-fault driver's car. This would effectively be a third party excess, which would be illegal.

[Hopkirk]

Thanks Arrods, that's interesting.

I suppose though they might be charging for recovery, storage and admin. It also occurs to me they might be asking for the rest of the years premiums in one go, as she pays monthly. I have heard of that before.

I'll know when I see the letter.

[EDDIE51]

Looks quite simple to me, car worth say £500 but policy has a £1000 excess.
Insured will get nothing for her car and have to pay £500 .
Car value £500 + £500 to insurance co = the £1000 excess.
The excess is payable on the entire value of the claim not just on the insured's own car's value. The entire claim could be £50,000 or more but the insured only pays the £1000 excess.

[bhg481]

Arrods - you are completely wrong. The fault driver has to pay EVERYTHING towards the cost of the claim of the non-fault driver's car. That's why you're insured. When the sum is large, the fault driver passes the claim to his insurance company who pays out all but he policy excess. If the claim is small the fault driver often pays himself to avoid a claim and losing NCB.

[Arrods]

OK - technically speaking it's the liable party that is responsible for paying the claim but in practice we usually rely on our insurer to pay on our behalf. As you say, that's why we have insurance in the first place. What I was trying to say was that, if you ask your insurer to meet the third party claim, the insurer cannot then ask you to pay a contribution (an excess) because in that case the insurance policy would contravene the requirements of the Road Traffic Act. The excess can only apply go the first party section I.e. Own damage party of the policy.

[pixie373]

Surely if i drove a worthless old banger (not saying it is, hoppy, just for example) and had a £100 excess on my policy, if i wrote off a brand new jag, they would still expect me to pay the £100?

[Arrods]

No they can't. They have to meet the full cost of the third party claim. The excess can only apply to any damage sustained by the old banger.

[pixie373]

Oh, thanks. I didn't know that. I thought excess applied per claim.

[EDDIE51]

Arrods you are totally wrong ! (again)
The excess IS APPLIED TO EVERY CLAIM even if your own car is not damaged!!
You could have 5 accidents in a week and have to pay the excess on all 5 even if your own car was not even scratched.
I just had to pay £75 excess because I accidentally put petrol in my diesel car it was covered by my insurance but I still had to pay.

[Arrods]

Yes Hopkirk, perhaps any amount demanded by the insurer over and above the excess is for the rest of the annual premium. This has nothing to do with the claim itself of course. I'm afraid that EDDIE51 and bhg481 have misunderstood the position regarding excesses. Will be interested to hear what the insurer says.

[Arrods]

But your claim was a first party claim! Of course you had to pay the excess! We've been talking about third party excesses - which I reiterate are illegal.

[bhg481]

If your argument was correct Arrods, 3rd party policies would not have any excess on them. But they do.

[hc4361]

The excess in third party insurance is for a claim for fire and/or theft.

[boxtops]

Arrods, I'm not clear where you're coming from, and what you say isn't altogether correct. If the Third Party has an excess on their policy, their own insurer will pay their claim then seek reimbursement from Hopkirk's SIL - but they won't pay the excess, the TP has to seek that themselves from Hopkirk's SIL via her own insurers. This has always been the case.

It's the total cost of the claim we're talking about here, and as we've said already, all the information is third hand via a relative - we don't even know accurately what it says in the letter.

[Arrods]

Bhg481, you might find a third party, fire and theft policy with an excess, but any excess can only apply to the first party section (I.e. The fire and theft section). I challenge anyone to show me any policy that requires the policyholder to pay the first part (an excess) of a third party claim. It would be illegal. Some large corporations have an agreement with their insurer that they will deal with third party claims up to a certain amount, but the underlying insurance policy must not contain an excess. I hope that this clarifies the situation.

[Arrods]

Boxtops - I agree with your analysis of how such a claim would be dealt with but I'm not sure that others are talking about the same situation. As I understand it, they were suggesting that if, say, I was at fault for £1,000 of damage to a third party, then because I had a £500 excess under my policy, then I would have to pay £500 to the third party. This is not the case. Legislators made insurance compulsory to protect victims and to ensure that they had a source of compensation. They would never have left victims in a position that they had to whistle for their compensation just because the liable party simply refused to pay.

[EDDIE51]

Arrods in the situation you describe , your insurer would pay the £1000 to the 3rd party's insurers then claim the £500 excess from you.
Personally, you do not pay anything directly to the 3rd party, your insurer does it via the 3rd party's insurers and then claim any excess from you.

[Arrods]

Sorry EDDIE51, I disagree. Any excess that I had under my policy would be the amount I had elected to pay for damage to my own vehicle, not to a third party. If I was not at fault, then yes I would seek recovery of the excess from the other party. If I was to blame, then it's my loss.