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A vehicle is declared a total loss when the cost of repairing it is higher than the current valuation of a similar vehicle. Once the insurance company decides that the vehicle is a write off then they take the steps described here. 1) The vehicle will have been transported from the vehicle repair shop to a salvage yard. This is done to lessen storage costs charged by vehicle repair shops for cars on their property. 2) The company will ask you for the vehicle documents. That is the MOT certificate if your car requires one, keys,V5 registration document, service records, purchase receipts and details of any outstanding finance. They will ask for your Certificate of Insurance to be returned. They will need the original paperwork before they settle your claim. Copies to start with will suffice but will slow down the process. If you enquire of the insurance company why they want all of this paperwork, they will likely tell you they need to check they have the correct model of the car, that it had a valid MOT and proof of service record to make sure that is has been maintained. These are all valid reasons. But the insurance company also want to validate your claim for fraud. Official documents have a number of anti-fraud measures designed by the issuing Government department. Careful perusal of the originals will help the claims official to quickly determine that these are indeed genuine documents and not fake. If there is doubt, they can use forensic science equipment to prove that the documents are fake or genuine. You would have to be a very clever forger to successfully forge all these documents. My advice is - let your insurance company have the original paperwork as soon as they request them. Just sending copies delays your claim. 3) Whilst you are waiting for your settlement details, your insurance company will be doing further checks as well. They will record your claim on the 'motor insurance anti fraud and theft register'. (MIAFTR) This is a national data base that has recorded all insurance written off cars and stolen cars since the start of the 1980's. It checks your car's details against all the information in the database to see if the car has ever been the subject of an insurance total loss before, or whether it has ever been stolen and not recovered. The computer 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 your insurance company might go into a fraud investigation. MIAFTR also as a matter of course checks your car against the HPI (Hire Purchase Information) database. If you took out finance to purchase the car and you still owe money, it will be on the HPI database. Rest assured that your insurance company will find it. So be truthful and tell them about your outstanding balance. The finance company is the legal owner of your car. Any settlement must be made to them until the loan is paid off. Whatever is left is paid to you. Your claim will also be recorded on CUE (Claims and Underwriting Exchange). This happens as a matter of course on all vehicle and household claims. Not all insurance companies subscribe but the vast majority do. Problems arise where the outstanding loan is greater than the worth of the vehicle. In this case the insurance policy does not completely pay off the loan. I remember a purchase plan for motor cycles. Young people went into a shop, bought a new bike plus all the helmets, leathers etc with money borrowed against the value of the bike. The interest rate on the loan was incredibly high. A few days later they would have an accident and they would write it off (or it was stolen). The value of the motor cycle was much less than the total purchase price plus the interest. It caused a lot of upset which was blamed on the insurance company rather than the stupidity of the youngster for entering into such a bad deal with the shop. 4) Your insurance company will be requesting bids for the wreckage. The higher the salvage value the less they will have to pay out on your claim. There has been a lot of publicity about cars which have been written off reappearing on the road, or being purchased by criminal gangs to help them disguise a stolen vehicle. The Association of British Insurers (ABI) have come up with rules concerning the disposal of vehicle salvage. All insurance companies comply with these rules. The result is that most salvage is sold by the insurance companies to established salvage merchants. If it is damaged to an extent that meets certain criteria, it will be stamped with a code that makes it illegal to repair the car and return it to the road. Cars with lighter damage can still be fixed and returned to the road. 5) Once all of the above processes have taken place your insurance company will make a settlement proposal to you. Their engineer will have referenced the trade publications to value the vehicle, adjusting these figures for the age, condition and mileage of your car, and his knowledge of the current 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 finance still outstanding on the vehicle. Your insurance company will make it very clear precisely how much you will receive and explain any adjustments to you. If you pay your motor insurance by Direct Debit, the it is likely that any remaining payments will also be deducted from the settlement amount. 6) Once 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 insurance company then own the remains of your car and, subject to legislation and the ABI rules, can do what they want with it. This will always mean that they will sell the salvage.
Article Source: http://www.financemanual.com
This article was written by Trevor Dace. 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 Tesco car insurance with online quotes and secure online payment.
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