Can an insurance company behave like this?!

[Fostec1]

Long story short, car went into the back of me. Their insurance company phoned me saying the car was classed as a category d write off and they'd make a payment to my account for £6000 (say) for the cost of the car. They did not mention any other figures or "salvage" but said I could keep my car.

Roll on three weeks and they finally pay, but £1000 less than agreed. They said that seeing as we are keeping the car they charge for this and take it off the £6000.

I totally understand that this is how insurance companies work HOWEVER never was this lower price discussed with me or anything even mentioned about a charge due to the fact I'll be keeping my car.

Am in my rights to be totally miffed by this and think insurance companies can't possibly be allowed to say £X and then change it?!

The settlement you get will be reduced if you keep the car as the insurance company would normally sell you car on to a salvage company. However you should have been made aware of the lower amount you would be getting in at least one form of contact ie phone letter text.

Also you should be able to change your mind if you want the extra grand and get rid of the car.

You don't have to accept their offer. In fact, never accept their first offer. If you can prove that the car as worth more (by providing examples to back you up) then do that. Have you actually spoken to them yet? If not, ask them for a copy of their correspondence where it mentions the deduction. Alternatively, notify your own insurance company and they might be able to advise you, especially if you have Legal Expenses cover on your own car policy.

Did you not sign anything? Saying you accepted their offer? If so was the salvage deduction not mentioned?

Salvage wasn't mentioned at all. That's the whole issue with the insurance company. I was told straight £X000 for the car and yes you can sell yours. I have then gone on to sell my car. Insurance company have accepted a cock up on their part and given me my courtesy car for another week and £200 in compensation.

I understand it's basically an admin error but still miffed that three weeks later when they eventually paid me we are still £800 down on what we thought we would be!

The £200 is not good enough. You sold your car in good faith, on the basis of what they told you. It is not fair of them to change their mind, admin error or not, and leave you out of pocket. It is not your fault they made a mistake, so you should not be the one paying for it. Had they informed you of their true position you would not have acted in the way you did.

They have failed their requirement to be clear, fair and not misleading in their communications with you and have failed to treat you fairly.

Look up their obligations under the FCA principles and write a letter of complaint demanding redress, i.e. payment for the full sum, spelling out where they have failed to meet the FCA's requirements. Inform them that if they fail to address your complaint to your full satisfaction you will take the complaint further, to the Financial Ombudsman Service. I think they have 8 weeks from receipt of your complaint before you can do that, from memory.

I think you have a strong case. Good luck!