Insurance shock for driver in Ford Ka crash

Carol Cunningham had a “fender bender” in the CBD and though she was insured with Dial Direct “the drama that followed was worse than the shock of the crash”.

The Table View woman said Dial Direct told her that her “low mileage 2006 Ford Ka (79 703km) which was serviced annually”, was worth R29 900 and as it would be uneconomical to repair at R36 701, it would be written off.

“Before I agreed to this my car had been prepped to be auctioned for up to R40 000: it would have been repaired and sold for between R55 000 and R57 000.

“Meanwhile, Dial Direct offered me R150 000 to finance a new car which I declined,” Ms Cunningham said. She asked Dial Direct for a copy of the assessor’s report but it “did not stand up to scrutiny”.

“It was full of duplications and contradictions and was loaded so the repair work was considered uneconomical,” said Ms Cunningham, who said insurance companies and auction houses have agreements to sell accident-damaged vehicles that are “deemed uneconomical to repair”.

“However, the people who had my car, stripped it of several parts and when I asked them about this they said it was part of the assessment process. I received a pay-out of R14 044, less R16 744 for salvage fees minus the excess of R2 700.

“Buying original Ford parts would cost more than R14 044 and I would still have to pay to have the body repaired,” said an unhappy Ms Cunningham, who claimed that parts valued at R17 963.30 were stripped, among them the battery, the condenser, the radiator and fan which were not damaged, were left in the car, but they were not from the Ford.

“So having the vehicle written off was not an option for me,” said Ms Cunningham, who did some research and found that a vehicle depreciates 60% in value in the first three years, based on an annual average of R16 000km, so “you should only pay a premium based on the yearly value of the vehicle”.

She also looked at the Code of Motor Salvage (www.saia.co.za) and her advice to motorists who are involved in crashes is to tell their insurers they will have their vehicle declared a Code 3, which has no worth.

“What percentage of claims are written off as uneconomical to repair and who is policing the insurance companies? The moral of the story? Don’t let the tow truck driver take your vehicle and don’t accept the decision of your insurance company: challenge them.”

Which is what Ms Cunningham did. “As part of my policy I have access to legal recourse through Lipco (which specialises in legal insurance) but I was told they represent Dial Direct and cannot sue themselves, nor can I refer the matter to the Ombudsman for Short-Term Insurance (Osti).”

Warwick Scott-Rodger, head of Dial Direct Insurance, confirmed that the vehicle which was insured for R29 900 was written off because at R36 701.66, it was considered uneconomical to repair.

“Ms Cunningham asked us to give her a quote and she would also ask an approved panel beater for an estimate as she could not afford to have her car written off. Her quote was for R22 000 which would still make it uneconomical for us to repair and did not include costs for damages which would only be seen once repairs had started,” Mr Scott-Rodger said.

Dial Direct offered Ms Cunningham an ex-gratia payment of R10 384 in addition to the R14 044, which she accepted. The excess was R2 700.

“So she bought the wreck for R2 720,” said Dial Direct, who obtained a quote for the parts Ms Cunningham is claiming and the ex-gratia payment covers this.

Mr Scott-Rodger said he did not know when Ms Cunningham was told she could not refer to the Osti but all Dial Direct’s communications refer clients to that office in the event of a dispute.

“Ms Cunningham is correct in saying that vehicle values decrease on an annual basis and the depreciated value is taken into account when premiums are reviewed on an annual basis. She was therefore paying a premium which took into account the current value of the vehicle.

“The retail value is what a specific vehicle would be sold to a buyer through a dealer and the trade values is what a seller would expect from a dealer and the market value is the average of the trade and retail price and are published in the Auto Dealer’s Guide that most insurers and dealerships use.

“We do not agree with Ms Cunningham’s advice to have the vehicle code changed to a Code 3, as this is to the detriment of the insured and the insurer, and may very well have far-reaching and negative impact on the customer’s claim and the purpose of the code is to aim at ensuring that consumers are treated fairly when decisions are made about accident damaged or stolen vehicles,” Mr Scott-Rodger told me.

Ms Cunningham said it was only “because of your intervention and the threat of negative media publicity it has been addressed”.

“I thank you for that. However, I will no longer be a Dial Direct customer. My once reliable car continues to give me problems.”

Ms Cunningham had the Ka repaired for R19 800, which included labour and the additional damage which she alleged was caused when the car was in the custody of Dial Direct.

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