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A car is written off when the cost of repairing it is greater than the current valuation of a similar car. Once the insurance company decides that the car is a total loss then they begin the process described below. 1) The vehicle will have been transported from the vehicle repair shop to a salvage yard. This has been done to reduce storage costs imposed by car repair businesses for vehicles in their compounds. 2) The insurance company will ask you for the vehicle documents. That is the V5 registration document, service records, purchase receipts, keys, MOT certificate if your car requires one and details of any outstanding finance. They will ask that you return your certificate of insurance. They will need the original paperwork before they settle your claim. Photocopies to start with will suffice but will delay the claim process. If you ask the insurance company why they require these documents, they will probably tell you they need to ensure they have the right model of the car, that it possessed a valid MOT certificate and some sort of a service history to make sure that is has been maintained. These are all valid reasons. But they also need to validate your claim for fraud. Government documents have a number of anti-fraud measures built into them by the issuing Government agency. Careful perusal of the originals will help the person checking the claim to establish quickly that these are genuine documents and not fake. If there is doubt, they will use forensic science equipment to validate that the documents are fake or genuine. You would need to be a very shrewd forger to successfully forge this whole collection of documents. My advice is - let the company have the original paperwork as soon as they request them. Your claim will be delayed if you send copies. 3) Whilst you are waiting for your settlement details, your insurance company will be doing further checks as well. They will enter 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 vehicles and stolen vehicles since the early 1980's. It checks your vehicle's details against all the information in the database to see if the vehicle 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 vehicle's registration number and VIN (vehicle identification number). If any details match further questions will be directed towards you, and the company might begin a fraud investigation. 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 car and you still owe money, it will be on this database. Have no doubt your insurance company will find it. So be honest and tell them about your outstanding balance. The finance company is the legal owner of your car. Any settlement will be made to them until the loan is paid off. Anything left over goes to you. Your claim will also be noted on the Claims & Underwriting Exchange (CUE). This is done as a matter of course on all vehicle and house insurance claims. Not all insurance companies subscribe but the vast majority do. Problems occur where the outstanding loan is greater than the worth of the car. In this situation the insurance company does not pay off the loan in full. I recall a scheme for motor cycles. Young people went into a dealer, bought a new bike plus all the helmets, leathers and so on with finance against the value of the vehicle. The interest rate on the loan was very very high. A short time 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 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 motorcyclist for getting involved in such a bad deal with the motorcycle dealer. 4) Your insurance company will be obtaining bids for the wreckage. The higher the salvage value the less the final cost of your claim. There has been much publicity about vehicles which have been declared a total loss reappearing on 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 insurance companies comply with this code. The result is that most salvage is sold by the insurance companies to established salvage dealers. If it is damaged to an extent that meets certain criteria, it will be issued with a code that requires the vehicle to be broken up or scrapped. Cars with less damage can still be fixed and put back on the highway. 5) Once all these hurdles have been overcome your insurance company will make a settlement proposal to you. Their engineer will have referenced the trade publications to value the car, adjusting these figures to take into account the age, condition and mileage of your car, and his knowledge of the current car market. The final figure he comes up with forms the starting point of the settlement value given to you. An excess might have to be deducted along with any finance still outstanding on the vehicle. Your insurance company will make it very clear exactly how much you will receive and detail any adjustments to you. If you pay your car insurance by Direct Debit, the it is likely that any remaining premium will also be deducted from the settlement amount. 6) Once you have accepted the offer (some companies might need your signature to a document called a 'form of discharge') you will be sent a cheque. 7) Your insurance company now 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 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 Tesco motor insurance with online quotes and secure online payment.
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