What Do You Know About Auto Insurance? Part 2 Of 4, Depreciation Value

What Do You Know About Auto Insurance? Part 2 of 4, Depreciation Value

by

jhcesi

The depreciated value at which your insurance company will probably stop or not pay on claims is 80%. That means that if your vehicle is five or six years old and you have a fender bender resulting in even minor damage, your insurance carrier will probably simply write-off your vehicle as a total loss. They may request from you the title to your vehicle and so they can destroy the title through the local department of motor vehicles. The carrier may go so far as to demand you relinquish your vehicle.

If your insurance carrier is USAA, and you have any doubts as to what I am telling you, call their Total Loss department and ask them.

A new car driven off the lot depreciates at about 30% right off the bat. One theory is that your new vehicle is depreciated to 60% by the end of the fourth year and totally by the end of the tenth year.

Another source uses 28% the first year, the second it is 48%, the third it is 64%, the fifth year it is 78% depreciated, the sixth year it will be 83%, by the seventh year it will be 87%, the eighth it is 90%, the ninth year it is 92% and finally in the tenth year it is 100%.

When considering car insurance and potential claims, your car insurance carrier will look at the depreciated value of your vehicle to determine how it will treat your claim. If your vehicle is depreciated 80% or greater, they will probably strongly urge you to deliver the vehicle to their repair center, anticipating a repair estimate equal to or greater than the remaining 20% value of your vehicle.

Repair shops that expect to get paid by an insurance carrier will generally inflate or cushion their estimates. That is just a fact of life. Whether it is cars, medical, or homeowners, vendors know the aggravation in dealing with an insurance company and they want to be compensated for the aggravation. Consequently, the repairs and premiums cost more.

The illogical intention may be to restore the vehicle to its original, OEM, condition. Well, when you are looking at a vehicle that is over 70% depreciated you have to take into account how your insurance carrier is going to process your claim. The last thing in the world you want or need is an inflated repair estimate.

While your state statutes may detail how repairs are to be completed, you will probably also read where a copy of the written estimate is to be given to you. USAA did not tell me what repairs were estimated and did not send me a copy of their estimate. Upon receipt of a copy of the estimate you should be in a position to review and negotiate what repairs are to be made. This option would be critical to avoiding inflated work to be proposed. The key factor should be that the necessary repairs are made and that the vehicle remain safe, within the intent of the law.

USAA strong armed me into taking my vehicle to their repair shop instead of taking it to my mechanic, which is what I originally proposed. USAA apparently will not consider an estimate from any source other than their certified shops. At least they will not consider one from my mechanic where the estimate is considerably less. It could be they wanted the highest estimate possible for repairs justified or not.

Your vehicle will probably be totaled by your insurance company if the repairs eat up any portion of the remaining depreciation value of your car, over the 80%. For example, if your vehicle is depreciated at 80% or, for example, down to $4,500 and the estimated repairs from their appraiser is any portion of that $4,500 your vehicle will most likely not be repaired.

The insurance carrier instead may demand that you relinquish the title of that vehicle to them so that they can file a destroyed or destructive title through the state department of motor vehicles. If your carrier pays you anything on your claim it will be pennies on the dollar.

The question you have to ponder is, In the eyes of your insurance company, is your vehicle worth anything .

You can actually go to numerous websites to find vehicle depreciation calculators to learn for yourself what the current value of your vehicle is. If internet is not available to you, visit your local library and the librarian will assist you.

The total loss department at USAA told me several times that a vehicle which they determine to be 80% or more depreciated, in which they receive an accident repair estimate equal to or over the remaining 20% depreciation, they are automatically obligated, by Florida statute, to report the vehicle as unsafe hazardous and declare it a total loss . After researching the Florida Motor Vehicle statutes I have no idea where they got that notion. It may be their policy, but I find no reference to anything so radical. I have also spoken with a highway patrol officer and she indicated she knew of no such statute.

There is a Chapter 316.60 which is interesting reading. Briefly, it provides for reporting or identifying vehicles which appear to be unsafe and should be removed from the highway or cited. The citation may require that repairs are made. It has no bearing whatsoever on the actual or depreciated value of the vehicle, only on its physical condition. Read how the statute appears to address the physical condition of the vehicle, not the monetary value of a car.

316.610 Safety of vehicle; inspection.–It is a violation of this chapter for any person to drive or move, or for the owner or his or her duly authorized representative to cause or knowingly permit to be driven or moved, on any highway any vehicle or combination of vehicles which is in such unsafe condition as to endanger any person or property, or which does not contain those parts or is not at all times equipped with such lamps and other equipment in proper condition and adjustment as required in this chapter, or which is equipped in any manner in violation of this chapter, or for any person to do any act forbidden or fail to perform any act required under this chapter.

(1) Any police officer may at any time, upon reasonable cause to believe that a vehicle is unsafe or not equipped as required by law, or that its equipment is not in proper adjustment or repair, require the driver of the vehicle to stop and submit the vehicle to an inspection and such test with reference thereto as may be appropriate.

(2) In the event the vehicle is found to be in unsafe condition or any required part or equipment is not present or is not in proper repair and adjustment, and the continued operation would probably present an unduly hazardous operating condition, the officer may require the vehicle to be immediately repaired or removed from use. However, if continuous operation would not present unduly hazardous operating conditions, that is, in the case of equipment defects such as tailpipes, mufflers, windshield wipers, marginally worn tires, the officer shall give written notice to require proper repair and adjustment of same within 48 hours, excluding Sunday.

Read Part 3 to learn about coverage requirements.

I am a world traveler, public speaker, writer, author of four published books, and business entrepreneur currently living in Florida. http://jhcesi.wordpress.com

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