It can be nerve-wracking knowing your insurance company has written off your car. It can be worse if you don’t know all the process involved.
Well, a vehicle is considered as written off when the insurance provider deems the cost of repairs to be higher than the insured value1 of your car.
While your insurance policy will help in softening this blow, the reality is that there are several variables at play when you’re dealing with a write-off2and most people, even the ones with the best comprehensive policies, come out feeling hard done by.
The Insurance Write Off Process
When your vehicle is involved in an accident, and you place in a claim, the insurance assessor will inspect the damage – they might visit you in person or view the taken pictures and also read reports from the garage.
The assigned assessor will follow a stringent criterion, but they can judge your written off vehicle if it’s beyond ‘economical repair.’
If your vehicle’s repair expenses are around 50% to 60% of the automobile’s valuation, it’ll most likely be considered as a total loss or write-off.
If that’s the case, your insurance provider3 will offer you a payout in the event of an insurance write off which will replace your vehicle with a similar car in the same condition in your locality.
How Much Will You Get?
In the case of car insurance write off, your insurance company4 will pay out a settlement figure. Again, most car insurance companies will rely on their financial experts to calculate the insured value of your vehicle.
The auto insurance companies will compare the prices of similar vehicles and details particular to your ride like mileage, the condition and any upgrades made to your car.
The result is typically an overall figure that your insurance provider will pay out before making any deductions.
The various deductions that could have an impact on your final settlement include:
- The excess amount: how much you pay first when you make the insurance claim
- The amount you owe the financial institution if you have a financed vehicle
- Dual insurance: If you have insured your car with two overlapping independent insurance policies
- Depreciation5: It’s the standard wear and tear of your vehicle, which results in your vehicle’s value declining
So, for instance, if you insured your vehicle for R750, 000, and you chose an excess of R5, 000, the depreciation comes to about R25, 000, and still owe the financier R50, 000 to the bank, then you can expect your payout to be:
R7500, 000 – (R5000 + R25, 000 + R50, 000) = R670, 000
Insurance write-offs have a simple process. However, before you start hunting for a new car or a used one from your favourite dealership make sure you know what mistakes to avoid when purchasing a car.
Also, you need to be aware of:
- You have the right to ask your insurer if you can keep your vehicle if it isn’t financed
- Based on the circumstances, you can keep your vehicle, and the appraised reclaim value will reduce the settlement.
If you disagree with your insurance provider’s assessment to write off your car, you’ll have the time frame of one week to dispute the assessment.
You should also offer your insurer some evidence to support your belief that the automobile can be repaired and that the costs of the repairs are less than the market value or the sum insured.
You also check with Ombudsman6 and make your complaint.
You could also try trading in your car instead, but make sure you know all the pros and cons of trading in your car.