Total loss car insurance – What can you do?
Imagine that your car is seriously damaged by an accident. When is your car a total loss for car insurance? And what options are there for you?
What is total loss?
Your car is a total loss if it has suffered large and expensive damage. Car insurers can declare your car total loss in two ways: technical total loss or economic total loss.
Technical total loss
If your car is so badly damaged that it cannot be repaired, it is technically a total loss . This happens, for example, if the car is completely deformed or has a lot of fire or water damage.
Economic total loss
If the costs of repairing your car are higher than the difference between the current value and the residual value of your car, the car will be declared an economic total loss . From a financial point of view, it is no longer useful to repair the car.
Example of an economic total loss
Suppose the current value of your car is 10,000 euros. You get an accident, and what is left of your car is still worth 2,000 euros. If the costs of repairing the car are above 8,000 euros, the car will be declared an economic total loss. You will then receive a reimbursement of € 8,000 from your motor insurer. The 2,000 euros you get from the garage that buys the wreck, so you have 10,000 euros to buy a new, similar car.
Value of your car
The value of your car depends on the age of the car and the conditions of the car insurance. For newer cars, car insurers usually assume the new value or the purchase value of the car. With older cars, insurers usually assume the current market value, which is the amount that your car would be worth on the day before the accident if you were to sell it.
Total loss car insurance reimbursement
Even if your car has been declared a total loss, it often still has value. This is the value that the wreck yields at a buyer (wreck value). The car insurer pays the current or new value of the car, minus the wreck value. This way you can always buy the same car again.
You may disagree with the current value or wreck value that the car insurer uses. You can negotiate this with the damage expert, possibly with the help of car price lists. If the negotiation does not produce anything, you can engage another expert yourself, a so-called counter-expert. This is especially useful if the difference in amounts is small. You then have a greater chance that you will receive something extra.
If your car has been declared a total loss, but can still be repaired, you can keep the car. The car insurance then pays the current value, minus the wreck value. That can turn out to be beneficial. Keep in mind that if you do not have the car repaired by the damage company, you also pay for the expertise costs. Was the accident not your fault? Then these costs can be recovered from the counterparty.
If you decide to buy a new car, do not forget to immediately take out insurance for your new acquisition.