The insured amount is the basic (main) index for calculating payments. Ideally it should be equivalent to the actual market value of the car. Then in case of total loss or theft, insured may purchase the vehicle of the same class and the same value. Usually, when the car is new and also bought at […]
The insured amount is the basic (main) index for calculating payments. Ideally it should be equivalent to the actual market value of the car. Then in case of total loss or theft, insured may purchase the vehicle of the same class and the same value.
Usually, when the car is new and also bought at the auto show, there are no problems with the determining of its value. But if the machine has already gone for 2-3 years, there may be some difficulties. And if the amount was initially misidentified (i.e., underestimated), then the insurance payment will be made proportionally. If the insured sum will be unreasonably inflated, there is also can be some problems – by law, the insurer can not pay more than the amount of direct damage that has been done by insured. Thus, there is no sense in paying high insurance premiums linked to a solid insured sum.
Typically, the cost of cars (respectively, the insured sum) that were in operation, the insurance company calculate it according to the Bulletin or other similar title. There are prices of certain brands and models of cars, and there are norms of annual. There is another way of calculating when the cost of cars is set according to the scale of amortization and its release. By the way, the second method has more disadvantages because ignores fluctuations in the market, which means that the estimated cost may be very far from real. And in this case the likelihood of incidents without compensation increases in several times.
There is one more delicacy! Even if the insured sum is correct, the limit may still not be enough to pay for damages if a car gets in an accident not once, but repeatedly. The point is that in many agreements there appear a notion of so-called insured amounts that “deducted”. It means that after each payment made by a company, the limit of liability of insurer reduces on its value. So Thus, if, for example, the policyholder has already received substantial compensation, and later his car was stole, the balance of the insured sum will not be enough to buy the same car.
And finally the franchise… everyone knows about it. But I tell you from my experience – sometimes even car importers can be cheated, making the insurance contract on test machines, which often can be damaged during road tests. The result – a franchise can be the same as the price of car repair. Because not everyone pays attention to the fact that the franchise can be of two types – conditional and unconditional. When a conditional franchise, company does not cover losses if the sum is less than the deductible, and pay full damages if they exceed it. When an unconditional franchise, its sum should be always deducted from the amount of compensation. So, if you insure the car (it costs about 25$) and select an unconditional franchise at 1% of car value, you must be prepared for that in case of loss with the amount $ 500, the company will pay only half ($ 250).
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