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Have you ever encountered a situation where the insurance company referred to damage to a vehicle as a "total loss"? In the following article, we will try to explain what this means for you and answer common questions you send us.
What is a total loss or total damage
Total damage is generally defined as damage to a vehicle in which it is either technically impossible to repair (technical total damage) or the cost of such repair would exceed the current value of the vehicle or the value of the item before the damage (economic total damage).
If the insurance company has assessed that it is a total loss, two scenarios arise. First, you will be given the option by the insurance company to auction the vehicle in a public auction on the internet. The highest bidder then wins the auction. This amount is then paid to you.
In the second, as part of the insurance investigation, the insurance company determines the value of the vehicle before the accident and deducts from that the amount the car would have been auctioned for. It will pay you the rest. As part of the insurance company's efforts to determine a higher original value for the car, it is a good idea for you to show that you have had the car serviced regularly or that you have recently increased the value of the car with some modifications.
Deliberately lowering the price of the vehicle
In practice, however, it is often the case that insurance companies, in an attempt to save money, promote the resolution of the situation through total loss even in cases where there is no total loss. For example, they may deliberately try to establish the price of the vehicle before the damage as lower than it actually was, or they may label the damage as total loss, contrary to the law, even though the cost of repair is less than 90% of the original price. However, the Explanatory Memorandum to the Civil Code and court decisions show that if the cost of repairs slightly exceeds the market value of the vehicle (by 10 to 20 %), the injured party may still insist on repairs being carried out in the event of compensation for damage under the compulsory liability insurance. It is therefore good to know your rights in case the insurance company presents you with only one possible solution.
Compulsory vs. accident insurance
In the event of a loss that is not covered by compulsory insurance but by breakdown insurance (for example, if you caused the damage yourself by parking carelessly), individual insurance conditions apply in each case, in which the insurer may consider the total loss to be, for example, as little as 85% of the price of the vehicle.
When to call a lawyer?
Legal assistance is recommended if the value of the car before the accident exceeds CZK 100,000. Otherwise, it may not be worthwhile to settle a dispute with the insurance company with the help of a lawyer. Particularly for lower value cars, where the dispute with the insurance company is for CZK 50,000 or less, it does not make economic sense to engage a lawyer because the insurance company, unless ordered by the court, does not usually reimburse the cost of a lawyer.
You are dealing with a problem involving total damage to a vehicle greater than 100k. 100 CZK? Do not hesitate to contact us.
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Markéta Poledníková
Markéta Poledníková
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Martin Herna
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Dietmar Repka
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