Matter of courtesy?

When a car is stolen or written off having insurance should be one of the few things that brings peace of mind. What matters to most people in the chaotic days that follow is getting a pay-out as quickly as possible, and the use of a car while waiting to buy a replacement.

However, it is wrong to assume that an insurance policy will automatically provide you with a courtesy car, and the policy may also contain some other nasty surprises.

Even the insurers which offer courtesy cars may only do so for a very limited period.

Policy small print can differ dramatically, but on the whole courtesy cars are taken back by the insurer as soon as they have made a pay-out offer. So, if the offer is made quickly then the car could be recalled within a matter of days leaving many policyholders stranded.

But the problems really begin if the courtesy car is taken back and then the insurer drags their heels in paying the policyholder.

According to the ABI's General Insurance Claims Code, claimants should expect payment within 10 days of agreeing it. In reality, however, some insurers take at least four weeks to pay out.

Andrew James, who runs his own company from his home near Newport in south Wales, lodged a claim with Barclays Insurance Services, when his car was written off in an accident last October.

The insurer made an offer very quickly and he accepted it but the pay-out took seven weeks to arrive. "I don't understand why my pay-out took so long. And what use is a courtesy car if it has to go back when the offer is made but it takes weeks for the money to arrive for a new car?" he says.

After looking into Mr James' case, Barclays apologised for the inconvenience caused in not paying within the usual three to four weeks and offered some compensation.

But even if most insurers do pay within a reasonable time frame, it still means customers - many of whom have paid high premiums to qualify for a courtesy car - are left with no transport for a long period.

"Courtesy cars are a bit of a grey area," says a spokeswoman for AA insurance brokers. "They are not provided as standard."

Premiums and excesses differ between policies, so digging in to the small print to see exactly what you get for your money is crucial.

Norwich Union, for example, charges an additional £15 a year if the policy is taken out direct with them. Direct Line - which only introduced courtesy cars as an option last month - estimates that it would add just under £10 to the average annual premium. In both cases, cars go back as soon as an offer has been accepted.

Insurance experts argue that it is reasonable for insurers to limit the amount of time a courtesy car can be supplied for. The AA spokeswoman says: "I think two to three weeks is reasonable. Arguably, once you've got the cash to buy a new car, it's up to you to buy it quickly.

"So if an insurer pays out in a matter of days, it makes sense for them to take the courtesy car back then. Otherwise people could become complacent and hang on to the car longer than necessary."

But even if your insurer coughs up a courtesy car and pays out speedily there could be a further problem lurking in the policy detail.

Insurers are highly unlikely to operate a "like-for-like" policy. So, if you have a big family and normally drive an MPV you are unlikely to be too pleased with the Micra or Corsa you will probably be given. Some insurers, such as Norwich Union say there is a degree of flexibility. In some cases, a customer may pay a surcharge for a bigger model.

The AA says it is investigating the possibility of working with the 20 insurers on its books to improve the provision of courtesy cars. If it comes to fruition, the AA would provide the courtesy car for an initial two weeks with insurers picking up the slack if the claim is not processed by then.

But there is a drawback. "This would involve some sort of costs," the AA spokeswoman says. "And of course, some of this would have to be passed to the policyholders. Either integrated into the premium or in the form of an added extra."