An insurer may sometimes adjust the value down to reflect your car’s condition. Picture: 123RF/DAISYDAISY
An insurer may sometimes adjust the value down to reflect your car’s condition. Picture: 123RF/DAISYDAISY

Q: My car has been declared a write-off and I’m not happy with the settlement amount offered by my insurer. How can I ascertain if it’s a fair amount, and is it negotiable with my insurer? Name withheld

A: Ernest North, the co-founder of Naked Insurance, responds:

There are three ways of insuring a car:

    • Trade value, which is the value that a dealer would, on average, pay you if you were to trade in your car now;
    • Retail value, which is what a dealer would, on average, sell the car for (or what it would cost you to buy that car today); and
    • Market value, which is halfway between trade and retail.

First find out from your insurer how you are insured.

There are independent sources that provide monthly figures for every model of every car. Ask your insurer what that value is.

If your mileage is significantly higher than the average for a model of that age, or if your car is in a really bad condition (with lots of small scratches), the insurer may sometimes adjust the value down to reflect your car’s condition.

Your insurer must be transparent in how they do this adjustment, and you can ask them for a detailed report.

Based on the value provided by your insurer, do some online searches to see if it’s reasonable and if it’s not, complain to your insurer. If your complaint isn’t resolved to your satisfaction, you can lodge a complaint with the Ombudsman for Short-term Insurance.

• Send your personal finance questions to money@arena.africa.