I’d like to highlight a situation that has arisen as the unfortunate result of my daughter and a friend both writing off their vehicles in accidents over the past 12 months. My colleagues vehicle was involved in a minor bingle (his car was actually parked) that broke the rear axle, and linkage of his vehicle. But the vehicle was about 15 years old.
This is my experience & opinion only.
When a vehicle is written off by an insurance company, a number of things happen:
1. Your insurance policy is cancelled, and the annual premium that you have paid is kept by the insurance company (i.e. if you paid your insurance for the year yesterday, write off the car tomorrow, they cancel the insurance, and keep the balance)
2. Your rego is cancelled, and any remaining refund that is realised is paid to the insurer
3. The insurance company will sell your vehicle “as is” and recover a certain amount from the sale of the damaged vehicle
4. Your excess is deducted from any payment made.
So it would appear from the outset, that insurance companies have an incentive to write off a vehicle that could otherwise be repairable in the customer’s eyes.
However, we customers need to take into account the sums above, and the insurance company’s assessment of the “repairability” of the vehicle. This "repairability" is calculated at their absolute discretion based on the above income streams.
One of the main issues here is what is a fair “market value”? Again, my experience would indicate that the “fair” market value as assessed by insurance companies is way below that of the owner.
There are several reasons for this:
1. As an owner, we would sell the vehicle at a “retail” price (i.e. a private sale) – not a “wholesale” price, and perhaps more importantly,
2. Most 4WD owners (I take it that most readers have 4WD’s) have invested additional money in modifications to their vehicles (bull-bar, winch, lights,
suspension mods etc) which increases the investment in our vehicle.
Remember when the vehicle is written off – it becomes the property of the insurance company, and trying to remove things from the car after it’s been written off may in fact be illegal.
So what can be done to protect yourself in the event of a write off? Again, from my experience, the best thing to do is declare the additional modifications made to your vehicle to the insurance company. The insurance company should then ask for a cost of each modification, which can then be added to the resale value of the “standard” vehicle. Or if they replace the vehicle, it has to be replaced with the same modifications. Alternatively, a lot of insurance companies will offer “agreed value” in their policies, which means that they pay you an “agreed value” which can include modifications made to the vehicle.
Having been through the process now twice over the past 12 months, it’s better to think of these things before they happen, that way there are no nasty surprises should the worst happen.
Dunno if this helps anyone - but there you have it...
Cheers
Chris