You are a claims handler for an insurer. One of your insurer's policyholders, Paul, owns a rare vintage motor
car.
The vintage car is insured under an agreed value insurance policy for the sum of £120,000. This agreed
value is based on an expert valuation carried out in 2015. The policy has been renewed annually, with no
subsequent change to the agreed value being advised to the insurer.
The vintage car was involved in a serious accident. Paul did not think the car could be properly repaired due
to its extensive damage and wanted the claim settled for the full £120,000. The insurer insisted that the car
was repaired.
Replacement parts were hard to source and as a result the replacement parts, which were deemed suitable
by the insurer, were not all vintage. An expert in valuing vintage cars, stated that in its repaired state the car
is now only worth £100,000. However, if the car had not been damaged its value would now be £150,000.
Paul wants to keep the car but argues that he should be given a cash payment of £20,000 to allow for the
loss of value.
Discuss the basis of indemnity and settlement for the vintage car. Refer to one relevant case in support
of your discussion.
Sample Solution