Is the claim - particularly from the third party - likely to be a large one?

While no insurer likes paying out, I'm surprised they have examined your car so closely.

I've been involved in a couple of sub-£1,000 claims, and no detailed examination was carried out on either occasion.

I think your best argument is the reckless act of disabling a safety-related warning light did not contribute to the crash.

That may win you a reduced payment for your car, but I suspect the insurance company is entitled to reject the third party claim.

Your other option is to sue the person who did the reckless act, but since that was your father, you may not want to do that.

For the Insurer to decline your claim, the accident has to be either be caused or significantly caused by the brakes being faulty or another defect with the car. In addition to this (not separately) the Insurer would also need to have a requirement in the policy that the car is maintained in a roadworthy condition.

Also it is up to the Insurer to prove the accident was caused or significantly caused by the defect.

Assuming the brakes were in good condition then I'm guessing your with a ropey insurer.

Refer your Insurer to section 13 of this link, advise them if they do not sort out your claim, that you will refer them to the Ombudsman and also seek compensation as per section 15

http://www.financial-ombudsman.org.uk/publications/technical_notes/motor-valuation.html