A car owner who challenged her insurer for reducing the agreed value of her vehicle has lost a dispute before the Australian Financial Complaints Authority.  

The complainant lodged a total loss claim with RAC Insurance following a crash last October, after which she found the agreed value had been reduced to $29,700 from $40,000.  

The insurer said it had flagged the change in a renewal notice the previous June and the woman agreed to it when she purchased the policy.  

The policyholder acknowledged receiving the renewal notice but said she had not read it.  

She argued $29,700 was “significantly less” than the car’s market value, noting sale listings for similar vehicles between $35,000 and $44,000.  

But the complaints authority says the listings do not reflect actual sale prices.

It notes RAC Insurance used Glass’s Guide, an industry source for car prices, to estimate the agreed value, which it deems a “reasonable sum”.  

It says it was the woman’s oversight not to read the policy document she was sent.  

AFCA also finds the insurer was entitled to write off the vehicle, because its quote for replacement parts only was $29,880.  

A parts quote the claimant obtained was slightly lower at $27,161, but still the policy would not cover a complete repair including labour costs.

An AFCA ombudsman said: “I accept ... that on balance the insurer has acted fairly, and in accordance with the terms of the policy, to write off the vehicle; it is uneconomic to repair the vehicle, and the insurer cannot only partially repair a vehicle.”

See the ruling here.