The insurance industry is run by honest and trustworthy people who only want to help the community get through its troubles with the least trouble. So, when you make a claim, the first question is whether it’s economic to repair your vehicle. The maximum amount you can claim under the policy is the fair market value of your vehicle. This is the price a buyer would be prepared to pay for your vehicle in the open market. Who is this buyer? This is a person who is interested in buying a vehicle, but he or she is not desperate. So the assumption is this buyer is shopping around and can afford to wait while negotiating the best price on a number of possible purchases. This means you are always looking to value your vehicle “as is”. This is not a hypothetical value. If it’s poorly maintained and the paintwork could do with touching up, you will get a low valuation. Equally, a beautifully maintained example of the make and model will command a high price. Note, loading up the car with customized features is not going to help the resale value. There’s more to breakdown and go out of fashion. Only have the most popular extras fitted. There are a number of reference guides like the Kelley Blue Book that offer prices and advice.
You’ll be pleased to know the average vehicle loses 65% of its value over the first five years of ownership. This means it’s nearly always uneconomic to repair older vehicles. The cost of labor is high and spares can be equally expensive. So unless you were very careful in choosing the vehicle and have maintained it well, even apparently minor damage can mean you lose the vehicle for a smaller cash sum than you were expecting. If you have doubts, do some research based on the reference guides and then talk it through with the claims adjuster.
What happens to the vehicle when it’s totaled? Well, the insurance company has bought it and can do whatever it likes with it. In most cases, the car will be sold on to a scrap yard where it’s broken for spares. Most insurers label the Vehicle Identification Number in the National Motor Vehicle Information System. That way, if you are tempted to buy a used car, you can check the VIN and make sure it’s never been totaled. Why take the trouble?
There are new reports out of the southern states where there’s been significant flooding over the last year. It seems a lot of vehicles that were totaled because of flood damage have been reappearing on the roads. After all, the main damage is going to be to the electronics, brakes and the airbags. Simple cleaning of the interior can suggest everything is in apple-pie order. So never buy secondhand without first checking the NMVIS whether the VIN has been tagged. Otherwise there’s a real risk your beautiful vehicle will rot from the inside out while the online auto insurance quotes assume it’s in good condition. This is one of those times when the auto insurance industry actually does something useful. The NMVIS is a fee-for-service organization with the range being $2 to $7 per report. It doesn’t cost much to be safe.