Vehicle insurance holders who want to know about the circumstances in which a car is deemed a total loss must reach out to their insurance providers for correct information. Comprehensive car insurance in Sa can benefit the policyholders with a vehicle replacement or market/agreed value cash payment in the event a vehicle is considered a total loss.
However, this advantage is not included in mechanical warranty policies that offer only minimum benefits like covering damage to other vehicles or properties and legal liabilities up to a specific limit. So, to avail of the best benefits, consider purchasing a comprehensive car warranty policy. While you examine the cost of comprehensive cover across insurers, read this article to learn about the total loss settlement benefit.
When a vehicle is damaged in an accident, the insurance company will typically determine whether the vehicle is considered a total loss or not. If the vehicle is deemed a total loss, the insurance company will offer a settlement based on the actual cash value (ACV) of the vehicle. Here are some basic things you should know about total loss settlement car insurance benefits:
1. What is a total loss?
A total loss occurs when the cost of repairing a damaged vehicle exceeds its actual cash value. In other words, if the cost of repairing the vehicle is more than what the vehicle is worth, it may be considered a total loss.
2. Actual Cash Value (ACV)
Actual cash value (ACV) is the fair market value of the vehicle at the time of the accident. The insurance company will typically use various factors to determine the ACV, such as the age, make, model, mileage, and condition of the vehicle before the accident.
3. How is the settlement amount determined?
The settlement amount is typically based on the ACV of the vehicle minus any deductible that may apply. For example, if the ACV of the vehicle is $10,000 and the deductible is $1,000, the settlement amount would be $9,000.
4. What if I disagree with the settlement offer?
If you disagree with the settlement offer, you may be able to negotiate with the insurance company or hire an independent appraiser to assess the value of the vehicle. However, keep in mind that the insurance company is not obligated to accept the appraisal of an independent appraiser.
5. Can I keep my totaled car?
In some cases, you may be able to keep your totaled car. If you decide to keep the vehicle, the insurance company will deduct the salvage value from the settlement amount. Salvage value is the amount the insurance company could sell the damaged vehicle for.
6. Can I still drive a totaled car?
If your car is deemed a total loss, it may not be safe to drive. In some cases, the insurance company may require the vehicle to be surrendered or salvaged. Even if you are allowed to keep the vehicle, it may be difficult or costly to repair it to a safe and roadworthy condition.
7. What if I owe more on my car than it’s worth?
If you owe more on your car than it’s worth, you may be responsible for paying the difference between the settlement amount and the outstanding loan balance. This is sometimes referred to as being “upside-down” on your car loan. Some insurance policies offer gap insurance, which can help cover this difference.
What happens if I choose car replacement?
Car replacement can be possible when your vehicle is considered a total loss, you are a comprehensive car insurance policy holder, your vehicle hasn’t traveled more than the kilometre limit specified by your insurer, and the total loss happens within a year of your vehicle’s new car registration.
Your insurer may replace your damaged car that is deemed total loss with a new one of the same make, model, series, or demonstration vehicle that hasn’t traveled a particular number of kilometres. Then again, talk to your insurer to know the specifics.
Your insurer will likely pay the replacement car’s on-road costs like registration fee, CTP insurance costs, and dealer delivery charges.
What happens if my vehicle is financed and I want a car replacement?
Before your insurer moves on to replacing your written-off vehicle, you must submit the necessary documents to show that your financier has agreed to refinance your car.
And, you don’t need to accept an offer for car replacement in case of total loss. Instead, you can request a total loss cash settlement. Plus, no other mechanical warranty includes these benefits apart from the comprehensive car insurance policy. Cheap motor warranty plans are affordable but many only cover your vehicle for limited road events. So, reflect on the benefits before buying a policy.