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Why would an insurance company pay less than the settlement figure?

There are several possible reasons why there could be a difference between the two figures: The settlement figure is the amount needed to settle the Agreement, which may be more than the replacement value of the vehicle. Generally speaking, insurance companies are obliged to settle for the full replacement value of the vehicle, but this depends on their contract with you. If there is an insurance excess to pay, this may be deducted from the settlement figure, which could mean it is different to the settlement value. The insurance company may disagree with the finance provider about the vehicle's replacement value at the time of the incident. At times, insurance companies deduct VAT from the replacement value. In these instances, the finance company recommends you check your contract with them to ensure it states that you will receive the full replacement value without reference to a deduction for VAT. If this is the case, you should continue to request the payment for the full replacement value. This is because compensation payments fall outside the scope of VAT.

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