Does the Auto Damage Insurance Cover the Full Claim Amount?
1 Answers
Auto insurance does not necessarily pay out the full assessed damage amount. If the actual incurred expenses (such as vehicle repair costs, victim medical expenses, and property losses) are higher than or equal to the assessed damage amount, the claim will be settled based on the assessed amount, meaning you get what was assessed. However, if the actual expenses are lower than the assessed amount, the claim will be settled based on the actual expenses. Typically, the insurance policy will specify the insured amount, which is generally related to factors such as the vehicle's age and the current market price. When purchasing auto insurance, the policyholder and the insurer can negotiate and determine the coverage amount based on actual circumstances. Of course, higher coverage amounts usually result in higher premiums. In the event of a claim, the insurance company will determine the compensation ratio based on the "proportion of the insured amount to the new car purchase price," with the maximum compensation not exceeding the vehicle's actual value. Methods for determining auto insurance coverage amounts: 1. Based on the new car purchase price: This method is generally considered full coverage, where the policyholder can receive compensation matching the actual loss in case of a claim. 2. Based on the actual value at the time of purchase: The actual value refers to the new car purchase price minus depreciation. While this method may reduce premiums, it is considered underinsurance from a coverage perspective. In the event of partial vehicle damage, the insurance company will only compensate a certain proportion based on the ratio of the actual value to the new car price. Since the policyholder is insured for the vehicle's actual value, most auto parts claims will be settled based on their depreciated prices. 3. Negotiated between the policyholder and the insurance company: This method is typically used for rare vehicle models or confiscated vehicles. Rare models often lack comparable market prices and tend to have higher values, while confiscated vehicles are usually purchased at very low prices.
