Car written off but bills remain

FSCL Case Study

Lucinda* was driving her BMW by a lake when she was caught up in flash floods. Water splashed up into the engine bay and into the computer systems at the rear of the car.

After getting the car towed home, she asked her insurance company for advice on how to get the car fixed. The insurance company sent her a claim form and told her to get the damage assessed. Lucinda took the car to her local BMW dealer who assessed the damage and told her it would cost $500 to repair.

After a couple of weeks, the repair costs to the car had escalated and Lucinda had paid more than $5000 to the car dealership. Only then did she contact the insurance company again to make a claim.

The insurance company assessed the car and determined that the car was a write-off.


The insurance company agreed to pay out $10,000 to replace the car. They were unwilling however to pay the $5000 she had already paid for the now-defunct repairs on the car.

Lucinda complained to FSCL that the insurance company had not told her that she shouldn’t pay for any repairs before making a claim, nor of the risk the car could be written off. She complained that she was out of pocket $5000 because of this error.


The insurance company said that they did not approve any repair work to the vehicle and the repair was started before their involvement. If a claim had been made when the accident first happened, as they had advised, Lucinda would not have been in this situation as the car would have been deemed a write-off from the start.  

It was difficult to determine what the insurance company told Lucinda as the person she spoke to made very rough notes after the phone call. The notes could not be relied on to give a full picture of what was discussed and what advice was given.


FSCL determined that instructions on how to make a claim were clear in the policy documents and on the insurance company’s website. The information clearly stipulated that a claimant must obtain the insurance company’s agreement before they incur any expenses in connection with any claim under the policy.

Even without the full details of the conversation between Lucinda and the insurance company, FSCL considered it likely that the need to make a claim was discussed early on. FSCL found that Lucinda should discontinue her complaint. She agreed to do so. 

This meant that Lucinda ended up being out of pocket $5000 because she didn’t make a claim straight away.

* name changed

Insights for consumers

Typically, if the value of damage approaches 50% of the value of the vehicle, the insurer may decide to write it off. The insurance company looks at what will cost them more; to repair it or write it off. Also, if repairs are not carried out properly, this could cause more expense in the future.

This means that it is very important that a claim form be submitted at the earliest opportunity so that the insurer can appropriately manage the repairs and any associated costs. People may be left out of pocket if they pay for repairs that haven’t already been considered and approved by their insurance company.

June 2022

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