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What is meant by a total loss or write off? It happens where the cost of repairs to a car is greater than the worth of the car, taking into account any residual value of the damaged car. Let's pretend that your car is severely damaged. It could be the result of a collision, a fire, or damage following a theft. Let's say that the repair costs are estimated at £5,000. If value of your car is say £5500 and the salvage valuation of the wreck is £600 then it is cheaper for your insurer to total loss the car rather than pay to fix it. Suppose that the salvage is only £400. It's very likely that the insurance company will still write off the car. The repair cost estimate of £5,000 is based on a external inspection and assessment of the repairs that are needed. There is a strong possibility that there could be more damage discovered if the repair was started. So even though it looks cheaper to repair the car it would be regarded as a border line write off. They will want to move the damaged car into 'free and safe storage'. This is normally at a salvage merchant. Their reasoning isn't difficult to follow. Repair Garages have realised there is easy money to be made. They won't get the repair job but they can charge your insurer just for keeping your car on their premises. Some charge outrageous daily rates that can make car clamping fees seem like peanuts! Even the lowest rates are similar to car parking charges in Central London. Insurance companies pay out vast sums every year for vehicle storage charges so they need to move the car as fast as humanly possible. Because a few policyholders have caused problems and cost them unnecessary money they might just tell you that they are planning to move it in 48 hours rather than asking your go-ahead. What has happened on occasion is that the salvage teams move so quickly that the car is being picked up by the salvage truck before you've been informed that it is a total loss!. Not surprisingly this can cause upset to some clients. But bearing in mind the reason, please be understanding! The insurance company are not disposing of your car, just moving it to lower costs. You could ask why you should worry about saving your insurance company money? The answer is simple. The more money that the insurance company pay out on claims, the more you pay in insurance premiums. It is in our best interest to keep their costs down. My advice is - do as they ask. Always agree to have your damaged car moved from a vehicle repairer. If you refuse, they can require you to pay the storage charges from the date of your refusal. Occasionally with an older car, it can be a write off yet still be safe and legal to drive. It might have a low value and only some minor cosmetic damage. Frequently insurers will give permission for you to keep the car at your house whilst the next steps in the procedure take place, provided that it isn't clocking up any storage charges.
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 insurance companies. His website www.instant-online-insurance.co.uk offers online motor insurance with online quotes and secure online payment.
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