UK motorists are easy prey for insurance under-valuations, according to a recent report.
As a result, motor insurance complaints to the Financial Ombudsman Service rose by 6% last year – with key criticisms surrounding pay-outs following an accident.
In cases where injuries are sustained, accident victims can recover compensation to cover costs both as a result of the accident and for any financial loss incurred during the rehabilitation process.
In 2007, Miss Smith, aged 17 from Frinton on Sea, Essex, was traveling as a passenger when the driver lost control of their vehicle and collided with another car.
Miss Smith was knocked unconscious, suffering a gash to the head and significant cartilage damage to her knee.
She underwent reconstructive surgery and was left with limited mobility and unable to work for a considerable time.
Soon after the accident, a representative of the driver’s insurance company, Quinn Direct, personally visited her and offered to settle her claim.
Aged just 17, and too young to enter into an agreement, Miss Smith recalls being pressured into making a decision: “When the man came around I was still not thinking properly.”
“They telephoned [after the visit] and said if I didn’t’ settle it would go to court and I wasn’t up to that at the time. They took advantage of a 17 year old girl.”
Miss Smith found it difficult to go about day to day tasks, and needed round the clock care in the early stages. It wasn’t until she sought legal advice that she realised her initial offer was no where near proportionate to her losses.
After a lengthy legal battle, she was awarded £19,900 in compensation – over ten times the amount initially offered by Quinn Direct.
Undervaluing and pressuring young or naive victims to settle claims is an underhanded tactic adopted by some insurance companies to reduce costs.
The 2011 Financial Ombudsman Annual Review suggests: “We continue to see some insurers making offers to their customers that they should know are lower than they ought to be.”
A proposed governmental cap on lawyer’s fees and ban on no-win, no-fee claims will only serve to starve many genuine claimants of legal services and financial support in the event of an accident.
Like a large proportion of the UK, Miss Smith would have had little in the way of support without no-win, no-fee help: “I don’t qualify for legal aid and [without costs being covered] I would not have been able to carry on as I have too many out-goings to afford legal help.”
Amanda, personal injury manager at Wosskow Brown Solicitors, said: “Miss Smith wasn’t aware of the support she was legally entitled to. In some instances, we’ve found insurance companies will prey on this naivety and pressure clients to settle on amounts that do not reflect their losses. As highlighted in this particular case, it’s imperative that accident victims seek legal advice before settling any claim and don’t give in to any pressure tactics to push you to settle.”