The process of settling insurance claims is pretty standard across all insurance companies with only two major differences in the policy setup coming into play in the event of a total write off. For claim values which are clearly less then the total value of the car insurance companies will pay for the cost of repairing the car to it’s original state, depending on the insurance company that you are with you may have the ability to choose the repairer yourself, or otherwise you may be bound to having your car repaired by one of the insurance companies approved repairers. In either case the insurance company will require you to pay the excess (deductible) towards the cost of repair, the value of this excess will have been predetermined when you took out the insurance policy.
In the event of total write off there are two types of policy arrangements that may have been agreed upon. The first and most reliable form of cover is agreed value car insurance, which is an arrangement in which the insurance will pay out a predetermined amount in the case of total write off which has been negotiated between the insurance company and the insured. When determining this agreed value insurance companies are often unwilling to insure the car for any sum greater than 10% over the cars market value, this is to prevent fraud which could otherwise occur.
The alternative type of cover to agreed value is full replacement, this type of policy is not as certain for the consumer as the value they will be paid in the case of total write off is unknown to them until after the crash has occurred. With this type of policy the insurance company will arrange for 2 independent valuators to access the value of the car prior to write off and this is the figure that will be paid out, the only reprise to this type of cover is that if the insured does not agree with the value given they can hire their own private valuator to come with a new value.
I’m not sure if your answer is just vague or if you left important information out because you do not know.
You state in the first paragraph that if the damage is below the retail value of the vehicle the insurance company will pay to repair the vehicle minus the pre agreed upon deductable. Better said would be the insurance company will repair an insureds vehicle if the repair amount is less than the retail value of the vehicle less the salvage value. With regard to a claimant the settlement would the insurance company will repair the vehicle if the cost of repairs is less than the retail value of the car less the salvage, less the rental.
Your second paragraph states there are two types of policy arrangements, agreed value and full replacement. First off. a stated value policy (your verbage was agreed value) may be for 10,000 dollars for a particular car, but the vehicle in question when valued, must be for the stated amount or above. If the value of the vehicle in this scenario is say 7000 dollars then that is all the insurance company will pay. It is my understanding that the only way to get a true stated value policy as you describe is to get an inland marine policy.
Your third paragraph states that the second settlement option is full replacement. This verbage is somewhat misleading. If I did not know I would think that your statment means that if my car is totaled, the insurance company is going to buy me a brand new car.
Better said is that if my car is a total loss the insurance company will pay me what the retail value of my vehicle was just prior to the loss, stated another way if my car is a total loss the insurance company owes me what it will cost to replace my vehicle with one similar to mine regarding condition, mileage and options.
The 3rd paragraph also states that in the case of a total loss the insurance company has two independent sources to establish the value of the vehicle. I have been doing auto claims for over 16 years in over 20 different states and I have never had an insurance company use anyone but their own adjusters to set the value. This adjuster may use newspapers or he may request an outside vendor to set the value. The outside vendors monitor newspapers, auto auctions, dealers sales and others to set the retail value of the vehicle.
If the information you shared is state specific then I apologize for my disagreement.
By: Chip on August 28, 2008
at 12:56 am