The car that needs more repairs than it’s worth?
What steps should you take now?
In this article, we will show you what the term total loss of a car means and what differences there are. Find out from us what type of insurance pays the damage and when and what the 130 percent rule is all about.
The most important things in a nutshell
One speaks of a car that needs more repairs than it’s worth if a repair is no longer worthwhile or the repair costs would be much higher than the purchase of an equivalent replacement car. Compensation is then usually paid out.
The compensation is paid either by the liability insurance of the other party in the accident or, depending on the situation, by your own fully comprehensive or partially comprehensive insurance. The damaged car can be recycled, disposed of, or kept. The replacement value and the residual value of the car after the accident are important for calculating the amount paid.
If the vehicle is to be repaired despite a total write-off, the so-called 130 percent rule applies. Only repair costs of a maximum of 130 percent of the replacement value of the car are covered.
Other costs such as the car appraiser, the rental car, or registration fees must be paid by the opposing liability insurance company. If your own fully comprehensive insurance is responsible, the respective contractual conditions apply.
What is a total write-off on the car?
If you’ve been in a major accident or your car has otherwise suffered major damage, it may be a total car write-off. A qualified vehicle appraiser will decide when this is the case. He will then also tell you whether the car is a technical or economic total write-off. In both cases, the responsible insurance company may no longer bear the repair costs as they would be disproportionately high.
Technical total write-off: One speaks of a technical car total write-off if the vehicle cannot be repaired at all or is extremely difficult to repair. This diagnosis is often made especially after severe accidents. Often the car is then ready for the junkyard. The appraiser then sets the current value of the car at zero.
Economic total loss: In the case of an economic total loss, the car can be repaired, but the costs would be higher than buying an equivalent replacement car. In that case, it is usually more sensible to part with the damaged car and get an adequate replacement.
Repair costs, replacement value, and residual value
Car repairs can often be very expensive. Of course, this is even more true when a car has suffered a total write-off. To protect yourself from disproportionate repair costs, the replacement value and the residual value of your car should always be determined.
The replacement value of the car is also called the current value and describes the value of the car immediately before the accident. Based on the regional used car market or certain portals, the appraiser determines the value that your car had shortly before the accident.
The residual value of a car with an economic total loss is also determined by the appraiser with the help of the local car dealer. To do this, the expert obtains various offers from dealers. You determine what the car is still worth despite a total write-off. The relationship between the replacement value and the residual value is the most important parameter when it comes to dealing with a total loss to an insurance company.
- Also Read: How To Get Rid Of A Junk Car Without Title
Who is liable for a total car loss?
A car that needs more repairs than it’s worth can be really expensive. Fortunately, in most cases, those involved are well insured against it. For example, if there is an accident and someone else causes your car to be totaled, then the culprit’s liability insurance usually has to pay.
In the opposite case, of course, the same applies. So if you caused the accident, your legally required liability insurance will take over. However, it only pays the car that needs more repairs than it’s worth on the other side. The damage to your own vehicle will not be covered if you caused the accident yourself.
Who one Has taken out fully comprehensive insurance is also well covered in the event of a self-inflicted total loss to your own car. The fully comprehensive insurance also pays the damage to your own vehicle. Besides, you are also atHit and run or vandalism insured. So if the person who caused the accident escapes undetected or if criminals attack your car and cause a total loss, you won’t be left with the repair costs.
In special cases, there is even partial comprehensive insurance for a total car loss. This always happens when the damage is the result of an insured risk. Partially comprehensive insurance usually protects against fire or short circuits. If such a fire causes a car that needs more repairs than it’s worth, the partial comprehensive insurance takes over.
Beware of the risk: Without the appropriate insurance, in the worst-case scenario, you will have to pay the cost of the total car loss out of your own pocket. This happens, for example, if you have caused an accident and the total loss affects your own car. You can find out when the car insurance pays here.
What does the insurance company pay in the event of a car total loss?
Only an independent vehicle appraiser can judge whether a car is a total write-off. He takes a close look at the vehicle, records the extent of the damage, and determines the current value of your car.
In principle, however, the costs for the expert are always an insurance benefit. Who has to commission and pay the appraiser depends on the insurance company involved.
- If your own fully or partially comprehensive insurance is to pay for the car that needs more repairs than it’s worth, then this will also be ordered by the expert.
- If you are the victim of an accident and claim your rights from the liability insurance of the other party involved in the accident, you can hire the vehicle appraiser yourself.
Refund: replacement value of the car minus residual value
As already described, the calculation of the insurance benefit in the event of a total car loss depends on the replacement value and the residual value. In the event of a car that needs more repairs than it’s worth, the repair costs are usually significantly higher than the current value and often also higher than the actual value of the car before the accident. A repair is rarely worthwhile.
So if you don’t want to keep the broken vehicle, you have the following options, depending on the insurance and the type of total write-off :
- In the event of a technical total write-off, the residual value of the car is zero. So you get paid the replacement value.
- In the case of an economic total loss, you get the replacement value minus the residual value that your broken car is still worth.
Fully comprehensive insurance usually pays out the new value in the first two years after purchase. In addition, the partially comprehensive insurance covers the outstanding installments if the vehicle was leased or has not yet been paid off.
Caution: The calculated replacement value already includes the VAT that you would have to pay when buying a car. The compensation that you will receive from the insurance company is, so to speak, earmarked. If you do not buy a car from it, the amount may be reduced by the VAT.
Repair costs and the 130 percent rule
Many drivers have grown very fond of their own cars. This is why some people who have been damaged in an accident would like to have their vehicle repaired even if the car is totaled. However, there are some special features to consider. A repair for an auto total loss may otherwise be very expensive.
If you want to keep and repair your car after an economic total loss, the so-called integrity interest comes into play. This means the right of an injured party to keep their property as it was before the accident. So it’s not just about getting the value of the broken car reimbursed, but about getting a fully functional vehicle back – just as it was before the car’s total loss.
With the integrity interest, however, the so-called 130 percent rule also applies. This states that the gross repair costs may only be 130 percent of the replacement value. The insurance company pays repair costs up to an amount of 130 percent of the amount the car was worth before the accident. The only condition: you must then use the vehicle yourself for another six months or be the registered owner.
Caution: The repair costs must be carried out completely and professionally according to the expert opinion. So you are not allowed to skip individual work in order to stay within the 130 percent.
To better illustrate the somewhat complicated calculation according to the 130 percent rule, we have put together two examples for you:
Example 1 – Repair costs are fully covered
- Replacement value: 5,000 euros
- Residual value: 1,000 euros
- Damage / repair costs: 6,000 euros gross
- Percentage: 120% of the replacement value
In this case, the insurance will cover the full repair costs as they are only 120 percent of the replacement value. If you had paid out you would only have received 4,000 euros (replacement value minus residual value).
Example 2 – The insurance only pays the replacement value
- Replacement value: 5,000 euros
- Residual value: 1,000 euros
- Damage / repair costs: 7,000 euros brutal
- Percentage value; 140% of the replacement value
In this case, the insurance does not pay the full repair costs, but only the amount of the replacement value minus the residual value – i.e. 4,000 euros. In such a case you would have to pay the rest yourself or you could forego repairs altogether and buy a replacement car.
In principle, you always have the option of simply having compensation paid out to you instead of the repair costs. This is then the replacement value minus the residual value if you want to keep your car and, for example, repair it yourself.
New car special case
People who suffer a total loss with a brand new car are lucky in an accident. If the car is no longer than four weeks old and has a maximum of 1,000 kilometers on the speedometer, the full purchase price from the liability insurance of the person who caused the accident is paid. Your own fully comprehensive insurance pays the new price up to two years after the initial registration, depending on the tariff.
Also, check these posts that are helpful for you:
- What To Do With A Car That Is Not Worth Fixing
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- Should I Repair My Car Before Trading It In: Useful Guide
FAQ: What To Do With A Car That Needs More Repairs Than It’s Worth
You can find answers to the most important questions here.
What should you do after a total loss of your car?
An accident with a car that needs more repairs than it’s worth is always a shock. Keep calm and first, make sure that no one involved needs medical attention. Only when this is ensured should you take precautions in order to be able to assert your claims in the end. This includes the following points:
- Speak to witnesses and get their contact details.
- Take photos of the scene of the accident and of all vehicles involved.
Document visible damage in as much detail as possible.
Is it worth repairing a car after a total write-off?
In purely mathematical terms, a repair after a total car loss is only worthwhile if the expected workshop costs are not higher than 130 percent of the replacement value. Whether you actually want to have a completely damaged car repaired also depends on emotional factors.
On the other hand, buying a replacement car could potentially bring you advantages – especially if the report puts the current value of your car high and the residual value low or if your fully comprehensive insurance pays you the new value. You can find out what you should consider when buying a car here.
What happens to a car after a total write-off?
There are basically two options: Either you keep the vehicle involved in the accident or you don’t. If the completely damaged car is disposed of, you should check whether the responsible insurance company also pays the costs for deregistration and disposal. Alternatively, the insurance company recycles the car itself and pays you the replacement value or the new value.
If you keep the car after the total loss, you can repair it yourself or have it repaired professionally and claim the costs according to the 130 percent rule. However, you also have to make sure that the car is brought to you properly. A total loss car is unlikely to be roadworthy.
What additional costs can be covered?
If the other party’s liability insurance is responsible for your damage, several additional costs can be claimed. These include, among others:
- The cost of an equivalent rental car.
- Up to 14 days of compensation for loss of use.
- Cancellation and registration costs as well as transfer costs
- The valuation costs for used car purchase from private.
Your own fully comprehensive insurance only pays for the items that have been contractually agreed. So it’s best to check your contracts for it.
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