Recently, we dealt with the ins and outs of dealing with your insurance company and body-repair centre after a collision. But what happens when your beloved ride is declared a total loss?
Many drivers are usually surprised when a collision results in the total loss of a vehicle. Damages may appear slight or cosmetic and owners fully expect to have the vehicle taken to a body shop for a quick restoration before getting back on the road. With uni-body construction, however, impact damage often lies hidden beneath the surface. The purpose of any vehicle design/construction is to protect the passengers at all cost by deflecting impact forces away from the cabin. A good example of how this works can be found by examining the area of an impacted vehicle, opposite to where it was hit. For example if the left front corner was crumpled, take a look at the right rear door, quarter panel or trunk lid, paying attention to the spaces between the panels. You’ll often find that the gaps have widened or narrowed, sometimes to the point that doors and trunk lids are hard to open and close.
For insurance companies, both private and public, the math is pretty simple. They take the current value of the vehicle, less what a recycler or salvage yard will pay for the scrap, to arrive at a number. If the repair estimate is close to, or over that amount, then the vehicle is declared a total loss. In some cases, large demands for used parts on popular models can drive up prices paid by recyclers. Insurance companies are always wary of repair cost overruns, so they like to include a “comfort margin” in their calculations. There are usually few arguments between insurance companies and their clients on this point. After all, would you really want to have a vehicle repaired and returned to you that was within a whisker of being written off?
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A pickup truck lies sideways in the snow after it was struck by a train near Birch Run, Mich. According to police, the driver walked away with a few bumps and scratches.
Neil Barris, AP
The process for determining the current value of a vehicle is pretty much the same whether dealing with a private or public insurer. They use third-party resources to compare sales transactions of vehicles that are a match to yours. They do not use prices advertised by retailers or private sellers as those numbers represent asking prices not transaction prices. They will also take into account any substantial repair or maintenance items that may have been recently performed on the vehicle such as new tires, major brake/suspension repairs, or engine/transmission overhauls.
Accessories and equipment added after the fact may also increase a vehicle’s value. If you’ve added a super sound system, you may be able to get it back for your next ride (if you have the original system to return to the vehicle). Some companies actually take the time and effort to ask for this information from their clients before finalizing the settlement. If yours doesn’t, make sure you bring it to their attention. They won’t take into consideration, any outstanding loans or liens on the vehicle. So if you’re in a negative equity position on your vehicle (you owe more than it’s worth), don’t expect a collision to get you out of the hole.
There are provisions for an owner to keep a vehicle that has been declared a total loss. Sometimes sentimental or classic/hotrod values override insurance ledgers. In cases such as these, most insurance companies will pay the settlement value, less what a salvage yard or recycler would pay for the wreck. The salvage value can be considerable, so payouts can be drastically less than allowing the insurance company to take ownership of the vehicle. As well, every jurisdiction in Canada has very restrictive regulations when it comes to restoring a vehicle for use on the road after it has been branded a total loss; therefore this option is rarely exercised.
If you can’t reach an agreement with your insurance company, all have some type of arbitration or mediation process. Private companies are motivated to keep customers happy during these disputes, so their settlement review processes receive relatively few complaints. Public companies are governed by provincial legislation. When researching vehicle values, pay attention to the geographic location of the price quotes. Used vehicle prices can vary widely between provinces and between large and small urban centres.
If you have questions or comments on automotive topics you’d like to see here, please send an email to bjoeturner@hotmail.com. Due to volume, direct responses aren’t always possible.
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