Your car is a significant investment and protecting it with appropriate insurance gives you peace of mind on the road. But what happens when your car is involved in an accident that leaves it in an irreparable condition? Here comes the term "total loss" - a condition where the insurance company declares that repairing your car is not financially viable. In this article, we will learn more about the total loss of a car after an insurance claim in the UAE, what it means, and how it is handled.
When is a car considered a "total loss"?
Not every damage resulting from an accident leads to a total loss. In the UAE, the unified vehicle insurance document sets specific criteria for considering the car a total loss:
Repair Costs: If the cost of repairing the damage caused by the accident exceeds 50% of the actual value of the car before the accident, it can be declared a total loss.
Major Structural Damage: If the vehicle's chassis is damaged in a way that cannot be repaired or replaced, or if fixed parts of the vehicle such as pillars are damaged in a way that requires cutting, pulling, or welding due to the accident.
How is the value of the total loss estimated?
When dealing with a total loss claim, the insurance company conducts a comprehensive evaluation of the car:
Damage Assessment: An appointed expert from the insurance company thoroughly examines the damage and determines the extent of the damage and the feasibility of repair.
Market Value Estimation: The actual value of the car before the accident is calculated, taking into account factors such as the year of manufacture, depreciation, demand for the car in the market, and previous damages.
Cost Comparison: The cost of repairs is compared to the actual value of the car. If the cost exceeds 50% or requires significant structural repairs, the car is declared a total loss.
How is compensation for total loss handled?
Compensation for total loss varies depending on the type of insurance:
Comprehensive Insurance: Compensation is based on the agreed value of the car after deducting a depreciation rate of 20% from the insurance value.
Third-party Insurance: Third parties affected are compensated based on the market value of the car at the time of the accident.
What happens after the total loss is declared?
Settlement Offer: The insurance company presents an offer to settle your claim for compensation.
Approval and Receipt: Upon your approval, the amount is usually paid to you by check.
Transfer of Ownership: The car or "salvage" becomes the property of the insurance company. Before receiving compensation, you must settle any dues on the vehicle and provide the necessary documents and authorizations and attend the relevant authorities if necessary to transfer the ownership of the vehicle to the company.
Transfer Fees: You do not incur any fees for transferring the ownership of the vehicle or issuing a possession certificate for the damaged vehicle.
If the car is mortgaged to the bank or another party, the insurance company obtains a no-objection certificate from the mortgagee to transfer the ownership of the car to them.
Tips for dealing with a total loss claim:
Document the Accident: Obtain a detailed government report of the accident with photos showing the damages.
Contact the Insurance Company: Notify the insurance company of the accident immediately and provide them with the necessary reports.
Cooperate with the Insurance Expert: Cooperate with the expert appointed by the insurance company during the inspection of the car.
Read the Insurance Document: Make sure to understand the terms and conditions of your insurance policy.
In conclusion
We hope to have clarified for you the concept of total loss after filing a car insurance claim in the UAE, the factors and criteria that determine it, and the steps and procedures to be followed. We advise you to review your car insurance document carefully.
