Do your car have insurance? If yes, maybe you need to learn about claim. The biggest problem when claiming insurance when your vehicle is total loss.
What is total loss?
In motor insurance, total loss is a situation which is your vehicle is damaged and the cost of repair and salvage would exceed the vehicle’s market value. Mostly, insurance provider will only pay out the lesser cost of buying a replacement vehicle instead of paying to repair the damage car. There are many questions regarding the value of vehicles and you may have questions regarding the value of your vehicle in a total loss situation. Depending on your insurer, the value of your vehicle is determined based upon the pre-accident condition of the vehicle, the number of kilometers on the odometer, the options available on the vehicle and any damage that was not caused by the accident. Even the market is a factor, as the value of your vehicle will also be dependent on the market assessment of vehicles in the area in which the policy holder lives. Your insurance company should take all of these variables into consideration in determining the replacement cost of your vehicle.
How Does Total Insurance Claim Work
It ain’t easy to negotite for total loss insurance. There are some tips to learn :-
Before an insurance company can pay for a total loss they must determine how they will come up with the value of the property or vehicle. The insurance company refers to the valuation clause for this determination.
The valuation clause describes how the property is valued in the event of a loss. The two most commonly used valuation clause definitions are actual cash value (ACV) and replacement cost.
A policy with an actual cash value valuation clause determines the amount of a total loss by calculating the amount it costs to repair or replace the item at the time of the loss and then subtracts the applicable depreciation. Therefore, when the insured receives the check for the total loss, they will be unable to replace the item unless they pay the depreciation expense out of pocket.
Replacement cost valuation on the other hand, pays the policyholder the amount it costs to repair or replace the item with one of similar kind or quality. The insured is made whole and will not have to reach into her pocket for the depreciation differential.
Total Loss and Deductible
Whether the policy has a replacement cost or actual cash value valuation, in the event of a total loss, the policy deductible applies. Therefore, if a person totaled a brand new car insured by an insurance policy on a replacement cost valuation, although the insurance company will pay for the full value of the car, they must deduct the amount indicated in the deductible portion of the policy. Thus, a policyholder insuring a car valued at $30,000 with a $1,000 deductible on a replacement cost valuation, would receive a check in the amount of $29,000 in the event of a total loss.
Title and Ownership
When an insurance company and policyholder agree upon a total loss, the title, or ownership of the damaged property is signed over to the insurance company. In essence, using the above example, the insurance company paid $29,000 to own the rights to the damaged vehicle.
It’s important to ensure the correct payee information on an insurance policy. In the event of a total loss, the check is made out to the policyholder and the company or individual listed on the Loss Payee or Lien Holder endorsement. Therefore, if the outstanding loan for the insured vehicle is completely paid off, remove the lien holder from the policy immediately.
** All the price and term is an example and different based on insurance policy. Just refer on your policy holder and agent.
Reference : Ehow
Get an advice from expert if you get to claim total loss.. There’s many trick from insurance provider to make your claim not what you must get…