Total loss: What does it mean for you?

You have been involved in a serious traffic accident. Luckily, you have escaped with only a few bruises, but your car is severely damaged, worse yet, it has been completely destroyed. The insurance company classifies your case as a so-called total loss. What does it mean and how can you be prepared for such a situation?  

A car is considered a total loss when the repair is no longer possible or is not economically viable. If someone other than you was at fault for the accident, you should get enough money from their liability insurance after selling the wreck to buy a car of the same quality as before the accident. If you are at fault or your vehicle is destroyed for example by natural disaster, it depends on whether you have CASCO and how you set your policy limits and deductible.  

In any case, the damage must be inspected by a specialist authorised by the insurance company, so you should report the claim to the insurance company as soon as possible and provide them with all the necessary documents and photographs.   

In the case of CASCO, it is considered a total loss if the car is destroyed, stolen or the cost of repair is usually more than 80% of the general value of the car. In the case of liability insurance, any repair costs must not commonly exceed 80% to 100% of the general value. The limits at which a claim is considered a total loss varies from insurer to insurer, so it is important to read the terms and conditions carefully before taking out insurance.  
How much money you get?  

The general value, which is used by insurance companies to determine the amount of damage and compensation, is the current market value of the car at the time of insured event. This is the amount you would have sold your car for before the accident, taking into account its age, mileage, wear and tear, etc.  
The general value is based on advertisements for cars of the same type with identical technical parameters. However, these prices are only indicative, which is why catalogues of used vehicles published by valuation offices and expert systems with prices based on market research are also used.
From the general value then will be deducted the value of the wreck or usable parts and in the case of CASCO, also the deductible, if it is arranged. The price of the wreck is usually settled by auction. However, the owner of the car doesn’t have to sell the wreck to the auctioneer and it is up to him what he chooses to do with it. Anyway, the final amount you get from the insurance company is usually much lower than your vehicle's original purchase price.    

You can protect your car’s value  
You can be unpleasantly surprised by the amount your insurance company will pay out because the value of a car drops quickly after you buy it, and decreases just by leaving the dealership. After three years, it can be as low as 50% of the original price. However, you can prevent this by purchasing insurance which protects against the loss of value of your vehicle. 

The protection for cases such as total loss is referred to as GAP insurance, which covers the shortfall between the current (market) value and the original purchase price. Thanks to GAP, you will get the full amount back and have enough money to buy a new car of the same quality and value as the original one.  
In the case of buying a car on hire purchase, GAP insurance is almost a necessity as it protects you from potential debts. If you lose your car, not only will you have nothing to drive, but you will have to pay the rest of the loan or lease.  

With GAP insurance from DEFEND INSURANCE, you can protect the value of your car for up to five years. We offer a wide range of programs for both new and used cars with or without CASCO insurance. So you can choose the one suitable for you and pay nothing extra.  

You can find more information about DEFEND Gap insurance HERE: