If the vehicle’s estimated repair costs exceed the current market value of an identical vehicle, it is considered a total loss. After the insurer declares the vehicle a total loss, they follow the steps listed here.
1) The car repair shop will move the wreck to a salvage yard. This is done in order to reduce storage costs that vehicle repair shops impose on cars stored in their yards.
2) They will request your vehicle documents. This includes the vehicle documents, such as purchase receipts, V5 registration document, service records, and details about any outstanding finance. They will request that your Certificate of Insurance be returned. Before they can settle your claim, they will require the original paperwork. Although photocopies are acceptable, they will slow down the process.
Asking the insurance company why they need these documents will likely result in them telling you that they want to verify that the vehicle is the correct model and that the MOT has been renewed. They also require proof of service records to prove that the car has been maintained. All of these are valid reasons. The insurers will also need to verify that your claim is not fraudulent. The issuing government agency has a variety of anti-fraud precautions for documents. The claims official will quickly be able to verify that the documents are genuine and not counterfeit by carefully inspecting the originals. They will use forensic science equipment to verify that they are genuine or fake if there is any doubt. To successfully forge these documents, you would need to be a clever crook. I advise that the company receive the original paperwork as soon and as possible. Just sending copies delays your claim.
While you wait for settlement details, your insurance company will also be working on other matters. They will add the claim to the’motor insurance theft and fraud register’. (MIAFTR). This UK database has collected all stolen and insured cars since the 1980’s. It compares your vehicle to all of the data in the database. This allows you to determine if it has been subject to an insurance total loss or if it was stolen. It will check your name, address, and postcode. If the match is confirmed, further questions may be asked and your insurance company may enter fraud investigation mode.
MIAFTR will also check your vehicle against the Hire Purchase Information database (HPI). This database will contain any loan money you used to purchase the vehicle. It is certain that your insurance company will find it. Tell them all about the outstanding balance. Your car is now the property of the loan company. They will pay any outstanding balance. Any balance is paid to you. Your claim will also be recorded on CUE, Claims and Underwriting Exchange. This is a standard procedure for all household and motor claims. While not all insurers subscribe, the vast majority of them do.
There are situations where the amount owing on the loan exceeds the value of the vehicle. The insurance policy may not fully pay the loan. I can recall a purchase plan for motorbikes. A group of teenagers bought a motor bike and all the accessories. They also purchased the leathers and helmets. The vehicle’s value was financed. The interest rate on the loan was exorbitant. The loan would eventually be paid off. The motor cycle’s value was less than its purchase price and interest. The insurance company was blamed for the furore, not the foolishness of the youngster who got involved in such a poor deal with the shop.
4) Your insurance company will solicit bids for the wreckage. Your claim will be less expensive if the salvage value is higher than the final cost. There have been many stories about stolen cars being written off and then rediscovered on the roads or being bought by criminal gangs. The Association of British Insurers has developed a code for disposing of vehicle salvage. These rules are followed by all member companies. This means that the majority of salvage is sold to established salvage dealers. If the vehicle has been damaged beyond the listed criteria, it will receive a code that will require the vehicle to either be scrapped or dismantled. You can still fix vehicles with less damage and get them back on the road.
5) After all the above steps have been completed, your insurers will send you a settlement proposal.
The engineer will have reviewed trade publications to determine the value of the vehicle. He will adjust these numbers to account for the condition, age, mileage, and current market conditions. The settlement value he comes up with is the starting point. All policy excesses and any remaining finance on the vehicle will be deducted.
Your insurance company will inform you exactly how much you will receive and any adjustments. Direct Debit is a method of paying your car insurance. Any remaining premium may be taken out of the settlement amount.
6) Once you accept the offer (some insurance companies might require your signature on a document called a “form of discharge”), you will be issued a check.
7) Your insurance company will then take possession of the wreckage of your car. They can, subject to laws and ABI codes, do whatever they like with it. They will most likely sell the salvage.
