UK Car Assurance - What Happens When An Insurance Company Decides To Write Off A Vehicle

A vehicle is written off when the cost of repairing it is higher than the current valuation of a similar vehicle. Once the insurer decides that the vehicle is a total loss then they begin the process detailed below.

1) The car will have been moved from the vehicle repair shop to a salvage yard. This is done to lessen storage costs imposed by car repair businesses for cars on their property.

2) The insurance company will ask you for the vehicle documents. That is the keys, MOT certificate if your car requires one, service records,V5 registration document, purchase receipts and details of any outstanding finance. They will ask for your Certificate of Insurance to be returned. They will require the original documents before they will be able to settle your claim. Copies will be ok to start with but will delay the process.

If you ask them why they want all of this paperwork, they will probably tell you they need to ensure they have the correct model of the car, that it possessed a valid MOT certificate and some sort of a service history to establish that is has been maintained. These are all appropriate reasons. However the insurance company also want to validate your claim for being fraudulent. Government documents have several anti-fraud measures built into them by the issuing Government department. A careful check on the originals will enable the claims official to quickly determine that these are genuine documents and not fake. If there is any doubt, they will use forensic science equipment to prove that the documents are fake or genuine. You would have to be a very clever crook to successfully forge all these documents. I would suggest that you let your insurance company have the original documents as soon as they ask for them. Your claim will be delayed if you send copies.

3) Whilst you are awaiting your settlement proposals, your insurers will be doing further checks as well. They will record the claim on the 'motor insurance anti fraud and theft register'. (MIAFTR) This is a UK data base that has recorded all insurance total loss cars and stolen cars since the start of the 1980's. It checks your vehicle's details against the contents of the database to see if the vehicle has ever been the subject of an insurance total loss before, or whether it has been previously stolen and never found. It checks against your name and address; post code; your car's registration number and VIN (vehicle identification number). If any details match further questions will be directed towards you, and the company might go into 'fraud investigation' mode.

The motor insurance anti fraud and theft register also as a matter of course checks your car against the HPI (Hire Purchase Information) database. If you took out finance to purchase the vehicle and you still owe money, it will be on the HPI database. And your insurer will find it. So be honest and tell them about your finance. The finance company is the legal owner of your car. Any settlement will be made to them whilst there is an outstanding balance. Anything left over is paid to you. Similarly, your claim will be noted on CUE (Claims and Underwriting Exchange). This is done as a matter of course on all car and home insurance claims. Not all insurance companies subscribe but most of them do.

Problems can arise when the outstanding loan exceeds the worth of the vehicle. In this situation the insurance policy does not completely pay off the loan. I recall a purchase plan for motor cycles. Teenagers went into a dealer, bought a new motor cycle plus all the leathers, helmets etc with finance against the value of the bike. The interest rate on the loan was very very high. A few days later they would have an accident and they would total loss it (or it was stolen). The value of the motor cycle was much less than the combined purchase price plus the interest. It caused a furor which was blamed on the insurer and not the stupidity of the motorcyclist for getting involved in such a bad deal with the shop.

4) Your insurer will be obtaining bids for the wreckage. The more they can get, the less they will have to pay out on your claim. There has been much controversy about cars which have been declared a total loss finding their way back on to the road, or being purchased by the criminal fraternity to help them disguise a stolen vehicle. The Association of British Insurers (ABI) have issued rules concerning the disposal of vehicle salvage. All member companies comply with these rules. The result is that most salvage is sold by the insurance companies to reputable salvage dealers. If the vehicle is damaged to an extent that meets listed criteria, it will be issued with a code that makes it illegal to repair the car and return it to the road. Cars with less damage can still be repaired and put back on the road.

5) Once all these hurdles have been overcome your insurers will propose a settlement figure to you.

Their assessor will have referenced the trade publications to value the vehicle, adjusting these figures to take into account the age, condition and mileage of the vehicle, and his knowledge of the local car market. The final figure that he arrives at forms the basis of the settlement value given to you. Any policy excess will have to be deducted along with any outstanding finance.

Your insurer should make it clear to you precisely how much you will get and explain any adjustments to you. If you pay your premium by Direct Debit, the it is likely that any remaining premium will also be deducted from the settlement amount.

6) When you have accepted the value (some companies might request your signature to a document called a 'form of discharge') you will receive a cheque.

7) Your insurers now own the remains of your car and, subject to legal limitations and those ABI codes, can do what they want with it. This will inevitably mean they will sell the salvage.

Article Source: http://www.123article.org

This article was written by Terry Cod. He has many years of experience working as a claims adjuster with a number of UK motor insurance companies. His website www.instant-online-insurance.co.uk offers online Tesco car insurance with online quotes and secure online payment.

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5 

Not yet Rated