Is a total vehicle loss compensated based on the insured amount or the actual value?
2 Answers
Vehicle loss insurance falls under the category of basic commercial insurance. The insured amount can be determined based on the new car purchase price at the time of insurance or the actual value of the vehicle. It can also be negotiated and determined within the new car purchase price of the insured vehicle at the time of insurance. The calculation formula for vehicle loss insurance: Basic premium + new car purchase price X rate. Vehicle owners can also choose underinsurance, which reduces the premium but also results in a discount on coverage. Compensation method for vehicle loss insurance: Vehicle loss insurance covers the cost of repairing the vehicle when the policyholder is at fault. If a supplementary agreement for no-deductible coverage is purchased, then the vehicle loss insurance can provide almost full compensation. Without the no-deductible coverage, the compensation is approximately 80%.
I experienced a total loss of my vehicle when my old car was completely submerged and totaled after a heavy rain. The insurance company sent someone to assess it and told me the compensation was based on the car's actual value, not the insured amount I initially purchased. The actual value took into account the car's age, mileage, and market conditions—my car was five years old, so the payout was much lower than its value when new. The insured amount is the maximum payout limit set at the time of purchase, but if the actual value is lower, you only get the actual amount. During this process, I had to provide the purchase invoice and maintenance records to prove the value, and the whole thing took about a week or two. Looking back, setting the insured amount too high might have been a waste of money. Now, I regularly review my insurance terms to avoid similar pitfalls. Handling a total loss requires careful attention to ensure fair compensation.
