Myths about total loss car insurance

Want to know what is true and what is a myth about total loss in car insurance? Find out in this article, with some examples!

If you own a vehicle, you may have already fallen victim to some myths about total loss car insurance.

There are several, which confuse users and leave doubts about when it is actually possible to obtain compensation from the insurance company.

Vehicle insurance usually includes basic coverage. This coverage protects the vehicle against collisions, theft, robbery and fire. Both in the event of partial and total loss.

But stories about total loss, where the consumer received nothing, are relatively common. And that's where several myths about total loss in car insurance arise.

We have written this text to demystify scenarios like these. Keep reading and find out everything you need to know about the subject.

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Do you know what happens after a total loss?

Total loss is understood as the situation in which the car can no longer be used by the consumer.

After the accident occurs, the CRV (Vehicle Registration Certificate) is transferred to the insurance company. The vehicle then becomes the property of the company.

Once the transfer is completed, the insurance company pays the user the full compensation. This amount is within the contracted percentage of the FIPE Table, taking as reference the month in which the payment was released.

The purpose of the amounts is to allow the consumer to purchase a new vehicle. However, the consumer is not obliged to make this purchase and can use the money as he sees fit.

Insured parties are also allowed to purchase insurance beyond 100% of the FIPE Table. With this option, the consumer will receive 100% of the vehicle's value, plus some percentage, such as 5%, of that value.

If you have also purchased so-called “additional coverage”, which protects accessories and vehicle glass, for example, the insured will receive amounts corresponding to each additional service.

In the case of a vehicle that is sold, whether through financing or a consortium, the procedure is different. Here, part of the compensation is used to pay off the debt with the bank.

The car is then transferred to the insurance company, and only then does the consumer receive the money. However, the consumer will receive the amounts left over after the insurance company pays off the car purchase debt.

Discover some myths about total loss in car insurance

Myth 1: Total loss means complete loss

The first misconception about total loss refers to when it actually occurs. Therefore, it is necessary to explain it: total loss occurs when the costs of repairing the vehicle exceed 75% of its market value.

In this case, the commercial value of the vehicle is that indicated in the FIPE Table.

Values ​​indicated in other types of tabulation or assessment may also exist, but are only used when specified in the contracted insurance policy.

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Myth 2: Defects can guarantee total loss

Another common mistake is the idea that other situations can define a total loss.

Such as damage to the car's axle, or even the opening of the airbag. However, these ideas are mistaken.

The most that can occur in these scenarios is the payment of partial compensation, since the loss will also be partial. However, this coverage will depend on the protection contract.

Myth 3: Car theft constitutes a total loss

Theft or robbery of a vehicle without recovery by the police does not constitute a full loss. However, in these cases, the user also receives full compensation from the insurance. This means that he or she can purchase a new car.

Myth 4: It is enough to say that the car was a total loss

The procedures for claiming total loss of a vehicle from the insurance company also often lead to incorrect understandings. Therefore, it is important to demystify them.

Initially, the insurance company will request a quote for the vehicle repair. It is common for at least 3 different quotes to be required for the amount to be charged.

It is based on these values ​​that the insurer will check whether the costs will be greater than 75% of the vehicle's price.

If this amount is not reached, the owner will have to repair the car. This is because there will have been a partial loss, which only means that the insurer will have to pay for the repairs.

Myth 5: full compensation is greater than FIPE

When a total loss is characterized, the insurer reimburses the value of the vehicle in accordance with the FIPE table.

Or, according to the value that appears in the contract. Not a penny more, not a penny less.

As mentioned, however, there may be additional coverage for equipment inside the vehicle. Only in these cases, and if compensation is provided for in the policy, will the amounts be added to the main compensation.

Myth 6: There is no such thing as a total loss for a third party car

Another very common question among drivers refers to when a total loss occurs in a third party's car. In this situation, it is important to pay attention to the clause on coverage for material damage to third parties.

This type of coverage is additional, and its rules are executed according to what appears in the contract. Therefore, they can vary greatly from insurer to insurer, and also from client to client.

In any case, third-party coverage usually covers partial and total loss of other cars. However, there is a limit to the costs that the insurer will bear.

Myth 7: If it wants, the insurance company can deny full compensation

The insurer may deny compensation in the event of a total loss. But not “if it wants to”: only if the consumer fails to comply with the insurance policy.

All the rules for using the protection are listed in the contract. The document contains rules that state that if the law is broken, the user will lose coverage.

This includes, for example, driving while intoxicated, or handing over the wheel to someone who does not have a license.

When there is fraud, compensation may also be denied. An example of fraud is causing a loss on purpose, just to receive compensation.

Now you know some of the myths about total loss in car insurance, and the truth about them. When purchasing your protection, be sure to read the contract carefully, so that all clauses are respected.

Both for you and for the insurance company. It is also worth having a good insurance broker. The specialist can help you find the best coverage and company.