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Find out more about recovered car insurance
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Recovered cars attract attention due to the value they are sold for. However, taking out insurance for this type of vehicle may not be so simple. Understand how this process works and the possibilities that exist for this type of vehicle.

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Vehicle theft and theft numbers are becoming frightening.

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According to a recent survey, a vehicle robbery or theft occurs every 1 minute in the country.

Of all the regions studied, the capitals account for 41% of cases.

Everyone knows that when an insured vehicle is considered a total loss, whether due to a case of theft or a slightly more serious collision, the owner of the vehicle is compensated and the insurance company becomes the owner of the car.

These recovered vehicles often end up at auctions.

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And being sold at prices much lower than those practiced in the market.

But the big question is whether it will be possible to insure it when purchasing such a vehicle.

In this article we will talk about how insurance for recovered cars works, and how to contract this type of service.

Insurance for recovered cars

Image: Getty Images

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Better understand the origins of auction cars

Before explaining how insurance for recovered cars works, it is important that you know how to understand the origin of auction cars, because the origin of the vehicle can affect whether it is accepted for insurance.

  • Cars damaged in collisions – these are vehicles that suffered collisions and were recovered and the document may state “claim recovered” when there was a light or medium collision or “Claim Compensation” in the case of a serious collision, the popular total loss;
  • Cars damaged due to robbery or theft – the vehicle was stolen, but was recovered after payment of compensation and ended up being auctioned;
  • Financing – this occurs when financing is obtained from the bank and the installments are no longer paid. The bank takes the vehicle and takes it to auction to cover the losses;
  • Company fleets – there are companies that sell their fleets to buy new vehicles and opt for auction;
  • Individuals – people can put their cars up for sale at auction to get good prices for them.

There are many reasons that can lead a vehicle to a car auction, so it is common to find new cars or cars in excellent condition in these places, for prices well below those found in the FIPE table.

However, taking out insurance for repossessed cars is not always as easy as finding a cheap vehicle in good condition.

It is worth mentioning that the accident rate of the vehicle is defined by CONTRAN – National Traffic Code and that insurers use it.

But is it possible to insure recovered cars?

The answer to this question is that, it depends.

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Some companies offer this type of coverage, others do not.

Furthermore, the vehicle's type of accident or the reason why it ended up at auction also counts.

In some cases it may be easier to take out insurance for recovered cars, but it is always necessary to request a quote to verify this possibility with the insurer.

Hiring this service will depend on several factors, in addition to the origin and history of the vehicle, the current condition of the vehicle and the driver's profile with information such as where they live and where they usually drive are also considered.

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It is very common for very careful inspections to be carried out so that the insurance company can approve the insurance.

But, to better understand this situation, see what usually happens.

How does insurance for recovered cars work?

When the insurance company accepts a recovered car, it is common for the compensation value not to be the full value of the FIPE table, it is usually 70% of it.

This reduction occurs so that people do not buy a car at auction at a discount and then receive full compensation in the event of an accident and have a financial gain on the insurance companies.

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For example, if a vehicle has a total compensation of 70% of FIPE, and the car is valued at R$30,000, the insured will receive the value of R$21,000.

Despite being an exception, there are policyholders who obtain compensation of 100% of the FIPE table with recovered cars.

Cars with minor accidents (small damage that can be easily recovered), or that do not have any accident information, are usually accepted more easily.

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Vehicles with a medium-sized accident (medium damage to high recovery) or large ones (suffering a total loss) have a high chance of being rejected by insurers, but to be sure, you need to get a quote.

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Those who have gone through situations considered more serious by insurers need to undergo Inmetro tests after being recovered and, if approved, have a chance of getting car insurance.

Vehicles that are recovered from financing are well accepted by insurance companies, with no impediments likely to occur.

In addition to the quote to find out whether the vehicle will be accepted for insurance, there is an inspection.

This may result in denial of insurance or a lower price for the vehicle, resulting in compensation being well below the FIPE table.

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Therefore, to find out if your recovered vehicle can be insured, you need to request a quote.

Even knowing the situations of greatest acceptance or refusal, each case is evaluated in a unique way.

Claim-free cars

Cars that went up for auction but did not have any accidents are more accepted by insurance companies.

This is because they are more similar to the characteristics of used cars.

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However, insurers still consider that cars purchased at auction have greater risks than cars that were purchased at dealerships.

Therefore, in these cases it may still occur that the compensation amount is lower, or a denial by the insurance company.

Can insurance be denied by the insurance company?

To answer quickly, yes, the insurance company can choose not to offer insurance for a car, but there are some rules about this.

One of them is that the insurer cannot deny insurance to a customer immediately, that is, without first evaluating the vehicle through a technical inspection, to verify the condition of the car and its possible risks.

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And even less so, disdaining the insured's vehicle because it was purchased at auction.

If this happens, the practice may be considered abusive, in accordance with article 39, IX, of the Consumer Protection Code.

Therefore, the insurer is obliged to justify, in a plausible and clear way, the reason for not accepting the risk.

Another very important point that the customer must be aware of is that the insurer will in no way be able to charge unconventional amounts simply based on the way the vehicle was acquired.

If this happens, the company is subject to sanctions for abusive consumer charges.

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How does the insurance inspection for recovered cars happen?

As with any car insurance contract, insurance for recovered cars also requires a prior inspection.

During the inspection, professionals usually evaluate issues such as the condition of the vehicle's bodywork, engine condition, chassis number, condition of the tires and accessories installed on the vehicle.

But when we talk about recovered cars, this inspection ends up being more careful and time-consuming.

After all, the insurer must be absolutely certain that the vehicle is in good condition to be insured.

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In addition to the inspection, the vehicle owner must have a report provided by DETRAN in hand, which states that the vehicle is in good condition and can count on car insurance.

How is insurance assessed for recovered cars?

Recovered cars need to be evaluated before taking out insurance.

Even if the company later decides not to offer insurance, this prior assessment needs to be carried out.

Therefore, it is important to know the main factors that are taken into account by insurance companies when evaluating a recovered car.

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See some of them below:

  • Origin of the vehicle (financing, accident, etc.);
  • The condition of the car and parts;
  • The customer profile;
  • Violence rates in the region where the car will travel;
  • The theft rates of the model in question;
  • Between others.

This data is decisive in the acceptance or refusal of the recovered car by the insurance company, especially those that depend exclusively on the condition of the car.

Information about the customer's profile and the region where they live is requested in any type of vehicle insurance, and is also used to calculate the value.

It is important that when carrying out a simulation, and especially when actually taking out insurance, you provide all the answers honestly.

This is because, if an accident occurs in a way that was not foreseen at the time of contracting (for example, in a region very different from what was informed by the client), the insurance company may refuse to pay the compensation.

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How is insurance for a recovered stolen car?

If you have auto insurance and your car is stolen and the insurance company is notified, they have 30 days to pay the compensation after delivery of the documents if it is not recovered.

If the vehicle is not recovered within this period, the owner will receive full compensation and the car will belong to the insurance company.

The insurance in this case is automatically canceled.

However, if the car is found during this period, compensation is not paid and the insurance remains in force until the end of the contract.

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If repairs are required for damage caused during the theft, the insured's deductible will be charged and the insurance remains in force until the end of the period.

In this case, insurance for recovered cars can be renewed more easily, but there may be obstacles to taking out a new one.

Can I take out insurance from the company that auctioned the car?

As seen before, one of the ways for a car to go up for auction is when an insurance company decides to sell the cars they have recovered.

However, this is not a guarantee that they will offer insurance for the car, as once sold, these companies have no connection with the vehicle.

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In this case, the car will undergo an evaluation, just like any other company.

Care when buying a recovered car

One of the biggest attractions of buying cars at auctions is the lower price.

However, this type of procedure requires some care that is not normally necessary when purchasing from dealers, and therefore, people may be a little less used to it.

The main care is regarding documentation.

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This is because the sellers of these vehicles may present irregular or altered documentation, which causes a lot of inconvenience for the buyer.

This is because there are insurance companies and banks that, when organizing a vehicle auction, may present irregular and even altered documentation of these assets.

Many people usually only discover this detail when purchasing insurance, which becomes even more difficult in this situation.

In addition, all vehicles must have a vehicle inspection report, issued by Detran.

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This document proves that the car has no pending issues in accordance with the legislation, and it is very important for insurers to assess the condition of the vehicle when taking out insurance.

Buying a vehicle that does not have this document can cause a big problem.

Once you better understand how insurance for recovered cars works and what are the chances of being able to take out this protection or not, it will be much easier to choose a vehicle in good condition at one of the authorized auctions that take place across the country.

Don't forget that, if you have difficulty obtaining quotes and hiring this type of service, it's worth looking for a broker and asking for help.

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