Ombudsman guidance on motor valuations and write-offs updated

The Financial Ombudsman Service updated its consumer guidance on motor valuations and write-offs on 4 December 2024¹. The service, which resolves complaints between consumers and financial businesses, said its approach to advertised prices has changed.

Historically the ombudsman did not use adverts to decide whether a valuation was fair, because vehicles often sold for less than their advertised price. That has shifted.

"However, we've been told by the valuation guides that cars are selling at or close to advertised prices. So, now we typically consider adverts when assessing the market value of a vehicle."

Financial Ombudsman Service, motor valuations and write-offs¹

The guidance sets out how the service decides whether an insurer's valuation is fair. It looks at specialist motor valuation guides and any other evidence provided¹. Where the guides give similar values and the insurer's figure is in line with them, the ombudsman is likely to agree with it. Where guide values vary significantly, it will look at whether the insurer's valuation is supported by other evidence, such as adverts or an expert's opinion¹. If it decides a valuation is unfair, it will tell the insurer to adjust it to either the highest figure in the guides or to the level supported by the other evidence, whichever is fairest in the circumstances¹.

Some vehicles are not covered by the valuation guides at all, including vehicles over 20 years old, which may be a lower age for some models, less common or unusual vehicles such as agricultural machinery, and conversions such as ice-cream vans or campers¹. In those cases the ombudsman will ask for other information, such as an engineer's report¹.

The guidance also covers several common points of dispute:

Issue	The ombudsman's stated approach
Adverts as evidence	Typically considered now; adverts should be as close to the specification of the car as possible¹
Modifications and optional extras	Many will not have much effect on second-hand value compared with guide prices¹
Left-hand-drive vehicles	A deduction for the difference against a right-hand-drive vehicle is normally fair, but supporting evidence is asked for; the deduction may not apply to a classic car¹
Agreed-value policies	The insurer is expected to pay the amount agreed in the policy¹
Pre-existing damage	A reduction is only fair if the damage would have affected market value¹
No valid MOT	A small deduction is probably fair if the vehicle would have failed an MOT¹
Salvage	The insurer usually owns the salvage once the owner has accepted payment for full market value; deducting what the insurer would have made from selling the scrapped vehicle is normally fair, with evidence¹
New vehicle replacement	Policies commonly provide a new car if the vehicle is written off within a certain time or repairs exceed 60-70% of the current list price¹

On complaints, the guidance says a formal complaint should go to the company first, and that if a final response letter does not arrive within eight weeks, or the response is unsatisfactory, the complaint can be brought to the service¹. It describes its service as free and easy to use¹.

Why it matters for households

The change affects anyone whose car is written off, or "totalled", and who disputes the payout. Insurers usually pay the vehicle's market value, meaning what it was worth just before it was stolen or damaged¹. Because the ombudsman will now typically weigh advertised prices alongside valuation guides, the evidence a driver supplies can bear directly on the figure an insurer is told to pay. The guidance notes that mileage and year of registration can have a big effect on the value of the same model, so adverts put forward as evidence should be as close to the car's specification as possible¹.

The update also sets out where deductions are likely to be accepted, including left-hand-drive vehicles, pre-existing damage, a missing valid MOT and a previous write-off, and where they are not, such as pre-existing damage that would not have affected market value¹. For agreed-value policies, which the guidance says are not very common and are normally used for valuable or classic vehicles, the expectation is payment of the agreed amount¹.

What happens next

The guidance was last updated on 4 December 2024 and applies to how the service assesses complaints from that point¹. Complaints can be brought to the ombudsman after eight weeks without a final response from the insurer, or sooner if the insurer's response is unsatisfactory¹. The service has published time limits for bringing a complaint, and information on how much compensation it can award. Consumers who want to understand the process can read about taking a complaint to the Financial Ombudsman Service and about complaining about an insurer.

Sources1 cited