I have got myself into a real insurance write-off pickle following an accident and I seek advice on what to do next.

My wife was involved in an accident late on a Friday evening in my 07 plate, March 2007, 110,000 mile very good condition, 1.9TD C20 VW Caddy van. Unfortunately she also tested positive for drink driving. Further misfortune occurred on the following Sunday when she slipped and severely broke her leg. Whilst she was in hospital having emergency surgery on Monday morning I phoned my insurance company to report the accident. As you can imagine I was is a state of stress and shock.

The insurance company started to make arrangements to recover the vehicle. I asked if the insurance policy was still valid due to the drink driving situation. The insurance company said (something like – I’m not too sure) “I’m not clear if you are covered”. The company claims it instructed me to recover the vehicle myself and make arrangements to store it on my driveway until it confirmed my cover. Getting the vehicle moved onto my driveway was clearly impracticable so I made arrangements to move the vehicle from the pound it had been recovered to my local repair company. The repair company made its inspection and said that the insurance company would probably write the vehicle off. However they could make the repairs using second hand and non VW parts for £2,000.

So on the following Monday I accepted the repairer's offer of £500 scrap and sold the vehicle and I, foolishly, didn’t check with the insurance company as I recalled our conversation as being “you are not insured”. Lo and behold later that same day the insurance company phoned to say “we’ve checked – you re insured after all”.

After much to-ing and fro-ing which included me sending detailed photographs of the damage plus the repair quote for £2,000 the insurance company has now offered me a settlement on a cash-in-lieu basis for £2,000 less the £300 excess. The insurance company also insists it has an obligation to have the vehicle recorded as Cat C. But the purchase of the Caddy was based on a no HPI and no Cat C history.

I have asked for a copy of the stressful phone conversation as my recall of its contents is unclear and the insurance company did not follow it up with any email of agreement. I have been waiting for this recording for two weeks.

So I seek advice on a couple of points:

1. The insurance offer of settlement of £2,000 is too low as I purchased the Caddy Van for £3,800 in January 2015. Do I have a case for arguing for a higher settlement? The insurance company claims that it could have sold the vehicle on for £1,000 rather than the £500 I received. But I have paid for all recovery and storage costs thus saving the insurance company a significant amount. Surely a settlement nearer to £3,000 is more appropriate?
2. Does the insurance company have an obligation to have the van listed as Cat C? If this happens then the purchaser of my vehicle could become very unhappy and seek redress from me.
3. Is there any merit or value in arguing for Cat D rather than Cat C based on the valuations?

As I said at the outset I have got myself into a right pickle with this one. Any helpful advice would be hugely appreciated.