Car Insurance Tips
When it comes to motor vehicles, there are certain situations where the car has to be written off (deemed to be a ‘total loss’) because of the extent of the damage. One of those situations is when contaminated or salt-water enters into your car above the door seals. Any car that’s been inundated with water for a period of time is generally going to be a total loss and not just a total loss, but it may well be what is referred to as a ‘statutory total loss’.
Any assessor who writes off a car has to notify the Written-Off Vehicles Register (WOVR), particularly if it is a ‘statutory total loss’. Statutory Total Loss means that the car can never be re-registered and the VIN number will be cancelled. So if you have been told that your car is a total loss, there may be restrictions on whether or not you can purchase the wreck and have it re-registered.
An Economic Total Loss means that the extent of damage makes it not worthwhile repairing that car (for example, if you have a $5,000 car and it’s going to take $10,000 to fix.) If your car is an economic or constructive total loss, potentially you or someone else could buy the salvage (the vehicle in its damaged state), you can fix it and re-register it. This is sometimes referred to as a ‘repairable write-off’.
It’s really important that you understand from your insurance company and from your assessor: is this an economic total loss (constructive total loss), or a statutory total loss?
It’s well worth being aware of your policy and knowing what the implications and the coverage terms of your policy are.
If you have had rainwater come into your car, or if you have had hailstones and your windows were all smashed and then there was some pretty significant rain following that event, your car may still end up being a total loss. Rainwater is considered ‘Category One’ water, or clean water. Therefore, if you can remove this water out from the vehicle within a certain period of time, then it may well be fine. However, within a certain period of time that category one water can become contaminated, and render the vehicle unrepairable. In events such as the recent Townsville floods, floodwaters are automatically classified as ‘Category Three’ contaminated water. This type of water should be treated the same as raw sewage, and even small contact can render your vehicle a total loss.
In the news earlier this year, I saw that two people had passed away from the contaminants from the Townsville floodwaters, and several others ended up in the hospital, so you really shouldn’t underestimate the risk that contaminated water can pose to your person or your property. However, if you have had rainwater through your car and you have cleared it out fairly quickly, your car will quite possibly be repairable.
When it comes to a vehicle being deemed a total loss, one thing to note that many people don’t realise is that you may not be entitled to remove any accessories from the vehicle if you have listed accessories in your car on your policy. (Eg: a ladder rack, bull bar, tow bar, etc.) In all likelihood when the car is written off those accessories will stay with the car. You can’t take off all those things on your car because that’s part of your insurance value, and when the insurance company pays you out the total loss value of your vehicle, they are entitled to retain the vehicle and all accessories noted on the policy.
Many people are also confused about the implications of a total loss in respect to your term of insurance. When you start a policy you’re covered for either twelve months or the value of the policy, and so if your car is written off, even if you started a policy today and it was written off tomorrow, you would be deemed to have received the full value of that policy. You would have to pay the entire twelve months of premium, which means you don’t get a refund of any of that premium because you have been deemed to have received the full value of that insurance policy. Even if you are making monthly payments, you have a twelve-month policy, not a monthly policy. Therefore, any unpaid monthly premium amounts will likely be reduced from your total loss pay-out. Therefore, if your car is written off your policy ends straight away and you won’t get any refund.
If your car is an economical total loss, for example, your insurer will pay it out and retains the damaged remains of the vehicle (the salvage). You can, if you choose, purchase the salvage back from the insurer for an agreed price, so you can repair it and keep the car (which is quite common). In this instance, you would have to realise that you are now uninsured, and you will be uninsured until you can show that you have repaired the car fully.
Some insurance companies won’t reinsure a car that has been written off, so when you’re looking at your options over total losses make sure you find out that information. The more information you have, the more informed choice you can make. Hopefully, this information helps you to understand your rights and obligations in the event of a total loss motor vehicle claim.
