A car owner who alleged his insurer did not properly notify him of a 31% drop in his vehicle’s agreed value has lost his bid for a payout increase.

The policyholder lodged a claim last December when the car was deemed a total loss. His insurer offered to settle on the agreed value of $19,230, with a $500 excess.  

But the New Zealand motorist said this was unfair and he had not been adequately informed when renewing the policy about two weeks earlier that the agreed value had fallen from $27,980.

The insurer made a revised offer based on the market value of $22,000, but the claimant rejected this.

New Zealand’s Insurance & Financial Services Ombudsman Scheme accepts the unnamed insurer did not draw particular attention to the value change on its renewal notice.  

It says significant cuts to agreed values are “unusual and need to be specifically brought to an insured’s attention”.

But the ombudsman notes the vehicle was initially insured for an agreed value of $35,000 in 2021 and the policyholder renewed even after this dropped by 20% in 2023.

It says it would probably have ordered the insurer to settle based on the car’s market value, which it has already offered to do.  

“This was the remedy that the ... scheme is most likely to award where the insurer was responsible for a vehicle being underinsured, and where it had not given sufficient notice of a significant decrease in the agreed value of a vehicle.”  

See more information on the decision here.