The expert has determined that your vehicle is an economic total loss? What will the insurance company now settle? 

The expert has determined that your vehicle is an economic total loss? What will the insurance company now settle?

Do you fancy a little terminology beforehand? That makes the somewhat unwieldy topic easier to understand!

• Replacement value (= this is what the vehicle was worth before the accident occurred)
• Residual value (= what the vehicle is still worth after the accident)
• Replacement cost (= difference between replacement value and residual value)

There is a total economic loss?

This is the case if the repair costs (gross) are higher than the replacement value of the vehicle. Now, from an economic point of view, it would understandably be unfair for the damaging party or its insurance company to carry out a repair that is significantly more costly than the procurement of a new vehicle in the same condition (so-called replacement procurement).

After all, you as the injured party could buy a new, equivalent vehicle on the vehicle market with the monetary value corresponding to the replacement value of the vehicle.

How is this implemented in practice? What does the insurance company pay me in this case?

It's simple: the insurance company will pay you:

Replacement value

- Residual value   

= Replacement cost

Would you like a small example?

Your car was worth 2.000,00 € before the accident, after the accident only 500,00 €, the repair costs would be 5.000,00 €.

In this case, the insurance company will settle the so-called replacement cost due to the present economic total loss. So as follows:

2.000,00 €

- 500,00 €

1.500,00 €

Conclusion:

The settlement of a total loss may initially seem unfair to some people. In fact, however, the damaging party or its insurance company fully complies with its legal obligations to compensate for the damage and the injured party suffers no disadvantage.

PS:

In this context, please also note the so-called 130 % case and the so-called unreal total loss. It is not uncommon for the opposing party's liability insurance to also arrange a higher residual value offer in cases of economic total loss, a so-called "residual value offer". Insurance oversupply. However, the insurance company is entitled to do this in very few cases.