esure Insurance Limited · DRN-6045397

The complaint Mr M complains that esure Insurance Limited (trading as Sheila’s Wheels) treated him unfairly following a claim on his motor insurance. What happened Mr M had an esure motor insurance policy. In June 2025, he made a claim on his policy after his vehicle was involved in an accident. esure declared the vehicle a total loss and offered to settle the claim for £96,500, less the policy excess, to match the price Mr M recently paid for it. Mr M thought this offer was too low. He said he’d got a good deal from the dealership and his vehicle was worth significantly more than he paid for it. He highlighted its low mileage and extra options, and provided adverts for similar vehicles that he believed showed esure’s offer was too low. esure didn’t increase its settlement but offered him £175 to apologise for poor service. Mr M remained unhappy and complained to this service. Our investigator recommended that the complaint should be upheld. He found four guide valuations based on the same make, model, year, and mileage as Mr M’s vehicle. The highest of these was £101,988. He thought this was a fair market value for the vehicle and recommended that esure pay the difference between this and its interim offer, plus interest. He also found that some service failings had caused Mr M distress but thought esure’s £175 compensation for this was fair. Mr M accepted our investigator’s assessment of the vehicle’s value but wanted an ombudsman to review esure’s service failings. esure didn’t accept our investigator’s findings. For these reasons, the case was passed to me to make a final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. First, Mr M has made detailed submissions setting out why he thinks esure’s actions were unfair. I’ve looked at everything he’s said but I don’t think I need to comment on every point he’s made to reach the right outcome. For example, I don’t think the question of whether the dealership made a mistake when pricing the vehicle or esure’s initial belief that the vehicle’s windows had been modified affect my decision. I’ve focused instead on what I think are the key issues, set out below. Second, I’ve seen the dashcam footage of the accident and photos taken at the scene. It’s clear this was a violent collision and I’m sure it would have been very shocking for the driver. I’m also aware of Mr M’s family circumstances around the time of the accident, so this would have been a particularly upsetting time for them. I hope they’re doing ok.

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The decision to declare the vehicle a total loss Mr M wanted esure to repair his vehicle and has questioned its decision to declare the vehicle a total loss, so I’ve considered whether a repair was possible. esure’s engineer’s report recorded a “frontal impact” and listed the significant damage to the vehicle’s bodywork, chassis, steering and suspension. That’s consistent with the dashcam footage and photos. This was a high-value vehicle and the engineer estimated repair costs at almost £73,000. That’s about 75% of esure’s valuation of the vehicle (see ‘Vehicle valuation’ below). In our experience, insurers will generally write off a vehicle when the cost of repair exceeds 60-70% of its market value. That’s usually because the cost to the insurer of paying for repairs is more than they’d lose by paying to write-off the vehicle, taking account of any amount they’d make on its salvage (see ‘Salvage fee’ below). esure’s claims agent told Mr M it would typically declare a vehicle a total loss if repairs exceeded 65% of its market value. That’s in line with industry practice and, in my opinion, not unreasonable. So I’m satisfied that esure’s decision to declare the vehicle a total loss was fair. Retention fee Mr M asked esure if he could retain the vehicle, presumably to see if he could have it repaired himself. esure said he could, but it would apply a retention fee (sometimes known as a salvage fee) of £37,500. Mr M thought this was unfair. Usually when an insurer settles a total loss claim it retains the salvage. This means it takes possession of the vehicle in its damaged state and the vehicle becomes the insurer’s property. That’s standard in most motor insurance policies to help the insurer offset its loss from paying a total loss claim and isn’t unfair. The insurer will often have an arrangement with a salvage dealer for disposing of the salvage and will receive an amount for each vehicle under this arrangement. This is sometimes a percentage of the vehicle’s pre- accident market value and sometimes the amount the salvage dealer sells it for at auction. This can also depend on the type of vehicle and the degree of damage. When an insurer allows a policyholder to retain the salvage it will usually deduct what it would have received under its commercial arrangement with the salvage dealer. Here, esure has provided evidence from its engineer to show this deduction was £37,500, roughly 38.5% of esure’s valuation. I understand why Mr M was unhappy. This is a very large deduction from his settlement. However, as he highlighted, this was a high-value vehicle, only a year old, with very low mileage. I’m not surprised the fee was high and I’m satisfied it was reasonable. Vehicle valuation This is the main point of dispute. Under the policy terms, esure must pay Mr M the vehicle’s market value. The policy booklet defines market value as: “the amount your car was worth on the open market at the time of the loss. This is based on research using independent guides such as Glass’s Guide, CAPS [sic], Autotrader and Percayso Vehicle Intelligence. We look at cars of the same make, model and age as yours. We also take account market conditions and the mileage and condition of your car at the time of the loss…”

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esure’s engineer found four guide valuations for Mr M’s vehicle: £80,190; £90,510; £99,097; and £101,988. He disregarded the lowest of these (which he considered an outlier) and calculated the average of the other three to produce a market value of £97,198. esure then looked at the price Mr M paid in June (£96,500) and offered him this to settle the claim, less the policy excess. esure initially argued: • Mr M bought the vehicle for £96,5001 just ten days before it was written off. • “…as an unwritten rule to be fair for customer any vehicle which was purchase recently [sic], we do what we call a RTI = return to invoice price (which is great for customers), so they are not out of pocket.” • If it paid Mr M the highest of the guide valuations, as our investigator recommended, this would be “betterment” because Mr M “would be financially gaining from a claim.” I understand those points. But that’s not what Mr M’s policy says. It says esure will pay him the vehicle’s market value. I think a more relevant argument is something esure said to us more recently: “it is a long considered approach that a recent purchase constitutes the market value of a car, regardless of what the guides say”. I’ve thought very carefully about this and whether the price Mr M paid for his vehicle represents a fair market value. On balance, I’m not persuaded it does. I’ll explain why. First, if a customer bought a £100,000 car for, say, £50,000, I don’t think we’d say they bought it at market value. We’d say they bought it at below market value. So I don’t think the price someone pays for a vehicle automatically means that’s its market value. And while I can see how esure’s “unwritten rule” would be fair to policyholders whose vehicle is worth less than they recently paid, I’m not persuaded it’s fair to Mr M. Second, our investigator found the following guide valuations based on a similar make, model, mileage, and condition of Mr M’s vehicle at the time of loss: £90,510; £90,990; £99,097; and £101,988. As our investigator explained, our starting point would normally be the highest of these valuations unless esure can show that Mr M can replace his vehicle for less. Third, esure’s engineer acknowledged in his report that he could find “only 1x example that matches specifications and of similar mileage to this vehicle”. I think that shows the difficulty Mr M would have replacing his vehicle. Fourth, I’ve reviewed the adverts Mr M provided and I’ve looked at recent adverts myself. These help show how much it might cost a policyholder to buy a replacement vehicle, with the qualification that the final purchase price is often lower than the advertised price after negotiations between buyer and seller. I think Mr M’s experience is a good example of this – the advertising history for the vehicle shows it was originally listed at £109,000 in April, reduced to £99,500 and £96,500 in June, and Mr M bought it for £96,000. I agree with Mr M that the vehicle most closely matching his was advertised at £106,990. This had about 250 less miles on the clock but was the same make, model and year, and had many of the same specifications. That’s helpful, but overall I think the evidence from the adverts is inconclusive. Some suggest a value over £100,000; others suggest a slightly lower value. And I think Mr M’s experience shows it’s entirely possible the car advertised at £106,990 was sold for a lower price. 1 The purchase invoice shows Mr M paid £96,000, not £96,500.

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If esure had shown that Mr M could replace his vehicle for the settlement it offered, I might agree that its offer was fair. However, it didn’t. It simply reverted to the purchase price. It hasn’t persuaded me that a valuation in line with the highest of the trade guides is inappropriate. For these reasons, I agree with our investigator that esure should increase its settlement to £101,988. Interim settlement/Outstanding car finance On 22 July, esure told Mr M it would make an interim payment of £96,500 “in the next 7 days”. However, it didn’t pay this. Its internal notes show Mr M was still asking it to settle the outstanding finance on the vehicle on 11 August, despite him providing the settlement information from the finance provider. esure told us it didn’t make the interim payment because Mr M refused to accept it. That’s also what Mr M told us. He recently told us he settled the outstanding finance himself via a company loan from his business. esure says it doesn’t have a formal policy when a policyholder refuses to accept an interim settlement, but I think it’s understandable that it won’t make a payment in these circumstances. But given Mr M was asking esure to settle the finance while refusing the interim payment, I wanted to check that it gave him all the necessary information about this. I’ve listened to the call on 11 August. esure’s agent initially told Mr M that it couldn’t pay the outstanding finance until Mr M accepted its final offer. That’s not right, so I’m a bit concerned by that. However, later in the conversation – after he’d put Mr M on hold, so potentially after getting advice from a colleague – the agent correctly explained that if Mr M accepted its interim offer, esure would settle the outstanding finance without prejudicing his complaint about the valuation. I’m satisfied that this explanation was clear and Mr M acknowledged that he understood. Mr M asked the agent to confirm this by email. esure’s claims team sent this email at 2.03pm. So I don’t think it would be fair for me to order esure to pay interest on the full settlement. Instead, I think it should pay interest only on the difference between its original offer (£96,500) and the fair market value (£101,988) from the date of its original offer. Courtesy car Mr M says esure threatened to withdraw the courtesy car it gave him to pressure him into accepting its settlement offer. He sent us a recording of his 15 July call with esure as evidence of this. Section 4 of the policy booklet (‘Loss or damage to your car’) says a courtesy car isn’t available when the policyholder’s vehicle is a total loss. Mr M’s policy schedule shows he hadn’t selected the additional hire car cover under section 5 of the booklet (‘Extra cover you’ve added’). This means esure didn’t have to give Mr M a courtesy or hire car. However, it later confirmed it gave Mr M a hire car from 8 to 17 July. It told us this was provided through the third party’s claim because the other driver was also insured by esure and its initial assessment was that liability for the accident would be shared. So while I accept that esure went beyond what the policy offered – which was to Mr M’s benefit – I’ve looked at its decision to withdraw the car and its communication about this. I’m satisfied that esure clearly told Mr M he needed to provide the purchase invoice so it

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could settle his claim. I’m also satisfied that Mr M refused to provide this. Under the policy terms, Mr M must provide any information esure needs to help it settle a claim. I think the price someone recently paid for a vehicle is a relevant factor when considering market value, so I don’t think it was unfair for esure to ask for this. esure also has a responsibility to mitigate its costs. I don’t think it’s reasonable to expect it to provide a car hire throughout the duration of a valuation dispute. And by this point esure had seen the dashcam footage of the accident and intended to hold Mr M’s named driver fully liable. Based on that alone, I think it would have been reasonable for esure to withdraw the car. In the circumstances, I don’t think it was unreasonable for esure to tell Mr M it would withdraw the courtesy car if he didn’t provide the information it needed. I’ve listened to the 15 July call. Mr M says esure’s agent pressured him into accepting the settlement offer. I recognise that he feels strongly about this but I don’t agree with him. I think both Mr M and the agent were respectful to one another despite their opposing views. I don’t think the agent’s tone was threatening or an attempt to bully him. In my opinion, he firmly but politely set out esure’s position that Mr M needed to provide the purchase invoice or the courtesy car would be withdrawn. Mr M – equally firmly and politely – told the agent he didn’t think he had to provide it and would take legal advice. For these reasons, I’m satisfied that esure’s actions regarding the courtesy car were fair. Other service issues Mr M’s emails show he was frustrated by esure’s failure to contact him or acknowledge emails. I think that’s partly supported by esure’s internal notes for the claim. For example, Mr M initially provided finance information on 9 July but esure doesn’t appear to have contacted the finance provider until 29 July (when it was told it didn’t have Mr M’s authority to discuss). esure continued to ask him for the finance information into August. I think it’s possible the fact esure instructed its engineer to handle the claim might have contributed to this. esure acknowledged the frustration Mr M experienced during the dispute. It offered him £175 to apologise for this. I’ve thought about what this service has awarded in similar circumstances. Having done so, I think its offer for these service failings is fair Finally, I don’t agree with Mr M that esure should pay his vehicle tax. When a vehicle is written off, drivers can get the remaining months on their vehicle tax refunded by cancelling it. However, they must arrange this directly with the DVLA. It isn’t esure’s responsibility. My final decision My final decision is that I uphold this complaint and order esure Insurance Limited to: • Increase its settlement to £101,988, less the policy excess. • Pay Mr M interest on £5,488 – the difference between its original settlement offer and £101,988 – at 8% simple per year from 21 July 2025 to the date of settlement • If it hasn’t already done so, pay Mr M £175 to reflect the inconvenience its handling of the claim caused, as per its 26 August offer. *If esure considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mr M how much it’s taken off. It should also give Mr M a certificate showing this if he asks for one, so he can reclaim the tax from HM Revenue & Customs if appropriate. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or

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reject my decision before 17 April 2026. Simon Begley Ombudsman

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