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A car is written off when the estimated repair cost is greater than the present market value of a similar car. Once the insurer decides that the car is a total loss then they begin the process detailed below. 1) The wreck will have been transported from the repairers to a salvage merchant. This has been done to reduce storage costs imposed by vehicle repair shops for cars in their compounds. 2) The company will ask you for the vehicle documents. That is the service records, purchase receipts,V5 registration document, 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 require the original paperwork before they will be able to settle your claim. Photocopies to start with will suffice but will delay the process. If you enquire of the insurers why they want all of this paperwork, they will likely tell you they want to check they have the correct model of the car, that it had a valid MOT and proof of service record to make sure that is has been maintained. These are all valid reasons. However the insurers also need to check out your claim for being fraudulent. Official documents have a number of anti-fraud measures designed by the issuing Government agency. A careful check on the originals will enable the claims official to establish quickly that these are genuine documents and not fake. If there is any doubt, they can use forensic science equipment to prove that the documents are fake or genuine. You would need to be a very shrewd villain to successfully forge this whole collection of documents. I would suggest that you let your insurance 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 proposals, your insurance company will be doing other things 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 been recording all insurance written off cars and stolen cars since the start of the 1980's. It checks your vehicle's details against the contents of the database to see if the car has ever been the subject of an insurance total loss before, or whether it has been previously stolen and never recovered. The computer checks against your name and address; post code; your car's registration number and VIN (vehicle identification number). If any details match further questions will be directed towards you, and the insurance company might enter a fraud investigation. MIAFTR also as a matter of course checks your car against the HPI (Hire Purchase Information) database. If you borrowed money to buy the car and you still have an outstanding balance, it will be on the HPI database. Without doubt your insurer will find it. So be truthful and tell them about your outstanding debt. The finance company is the legal owner of your car. Any settlement must be made to them until the loan is paid off. Anything left over is paid to you. Similarly, your claim will be recorded on CUE (Claims and Underwriting Exchange). This is done as a matter of course on all vehicle and household claims. Not all insurers subscribe but the vast majority do. Problems can arise when the outstanding loan exceeds the worth of the car. In this situation the insurance policy does not completely pay off the loan. I recall a purchase plan for motor cycles. Young people went into a dealer, bought a new motor cycle plus all the helmets, leathers etc with finance against the value of the bike. The interest on the loan was incredibly high. Some 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 combined purchase price plus the interest. It caused a furor which was blamed on the insurer rather than the stupidity of the youngster for getting involved in such a bad deal with the motorcycle dealer. 4) Your insurer will be requesting bids for the wreckage. The more they can get, the less they will have to pay out on your claim. There has been much comment about cars which have been declared a total loss reappearing on the road, or being purchased by the criminal fraternity to aid their disguise of a stolen vehicle. The Association of British Insurers (ABI) have come up with rules concerning the disposal of vehicle salvage. All insurance companies adhere to this code. The result is that most salvage is sold by the companies to established salvage dealers. If it is damaged to an extent that meets certain criteria, it will be stamped with a code that makes it illegal to repair the car and return it to the road. Vehicles with lighter damage could still be repaired and returned to the highway. 5) Once all of the above processes have taken place your insurance company will make a settlement proposal to you. Their engineer will have looked up the trade publications to value the car, amending these figures for the age, condition and mileage of the vehicle, and his knowledge of the local car market. The final figure that he arrives at forms the starting point of the settlement figure given to you. Any policy excess will have to be deducted along with any finance still outstanding on the vehicle. Your insurer should make it very clear exactly how much you will get and detail any adjustments to you. If you pay your premium by Direct Debit, the chances are that any remaining premium will also be deducted from the settlement cheque. 6) Once you have accepted the value (some companies might require your signature to a document called a 'form of discharge') you will be sent a cheque. 7) Your insurance company then own the remains of your car and, subject to legislation and those ABI codes, can do what they want with it. This will always mean they will sell the salvage.
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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 online motor insurance with online quotes and secure online payment.
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