Insurers could be on the hook for future liability says Copart UK’s MD

The UK salvage and car repair sector is beginning to be influenced by topical US trends, for example surrounding future liability, where customers hold insurers accountable if they experience issues with their vehicle following an insurance-related repair, said Jane Pocock, UK managing director at salvage firm Copart.

She explained: “People will look and say ‘right, you’ve repaired my car, you’ve got responsibility if anything goes wrong or it’s not as strong as it originally was when it came off the production line’.

“If [customers] have any issues with it regarding calibration, any of [the] safety features, or the car isn’t as resilient as it once was, then I think they’ll look to go back to the insurers for future liability; that is potentially coming down the pipeline for the UK market.”

Premium hikes

Alongside potential post-repair finger-pointing, Pocock further sees the UK repair and salvage market undertaking a “see-saw” in terms of its focus – switching from being a repair centric marketplace to instead have a salvage first approach.

This is, in part, influenced by the fact that more expensive vehicles are arriving in the total loss marketplace because of the increasing cost and complexity of repairs – external car sensors, for example, are the main culprit for bumping up repair costs.

“The value of salvage is going up, which is positive for our marketplace, but not so great for insurers and I’m sure they are adjusting their premiums accordingly,” Pocock added.

“Repair costs are going up and a lot of insurers own their own repair networks, therefore their ethos has been very much around repair, yet we’re challenging that equation.

“One of our key objectives is to challenge at what percentage against [pre-accident value (PAV)] that the repairers repair. In the US for instance, most cars are salvaged if the repair cost hits a 50% PAV and we’re much higher than that in the UK.

“I can see that over time, the cost of repair will continue to rise because the number of body shops is reducing and the benefits from salvage will go up.”

Charging challenges

The escalating rise of electric vehicles has also impacted on the sector, noted Pocock. She said that insurers need to better understand the variances between the salvage of electric vehicles compared to internal combustion engines, as electric cars generate much higher returns through Copart’s global online vehicle auction – this difference should be reflected within claims decision-making.

Handling electric vehicles has also affected operations at Copart – the business has been training staff since the beginning of 2018 on safety measures, such as avoiding electrocution and fire risks, as well as ensuring that employees collect charging cables for vehicles when they pick up total loss cars. These charging leads are considered to be more valuable than the car’s key, and they can be a costly £500 to replace – Pocock noted that this should lead to different claims settlement decisions.

She added that battery ownership is another minefield to negotiate, as customers can own their car but lease the battery – this varies between manufacturers.

With this in mind, Copart has set up electric vehicle workshops for its insurance partners, which will take place in the coming months. 

Usership, not ownership

An extra challenge for the insurance sector, according to Pocock, is the transition from car ownership to car usership, as an increasing number of vehicles are purchased under finance agreements. This obviously adds a layer of complexity when it comes to salvage, but Pocock said this will impact insurers too.

“[Insurance companies are] unlikely to have a customer for life because people are constantly changing what they’re driving.

“The usership model is meaning that, quite often, linked in with the finance, you’ve got insurance. I think that industry has quite a lot of challenges,” she added.