replacement value
What an equivalent vehicle costs on the regional market – including specification, mileage and its condition before the collision.
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An economic total loss does not mean the vehicle is destroyed. It only means the repair would cost more than the vehicle was worth. Whether you may still repair it – and who pays for that – is decided by three figures.
A technical total loss exists where the vehicle cannot be repaired at all. That is rare.
The case that matters in practice is the economic total loss: the vehicle could be repaired, but the repair costs exceed the replacement value. Commercially, obtaining a replacement would then make more sense.
Three figures decide the settlement. The replacement value is what a comparable vehicle costs on the regional market. The residual value is what the damaged vehicle still fetches in its post-collision condition. The difference between the two is the replacement cost – which is as a rule what gets reimbursed.
What an equivalent vehicle costs on the regional market – including specification, mileage and its condition before the collision.
What the damaged vehicle still fetches. This item is the most frequent point of dispute in a settlement.
Replacement value less residual value. That is the amount typically reimbursed where a replacement is bought.
Even where the repair would cost more than the replacement value, having it repaired can remain recoverable. The German Federal Court of Justice recognises what is called the integrity interest : the understandable interest in keeping the vehicle you know.
The threshold sits at 130 per cent of the replacement value. Where the repair costs exceed that, reimbursement of the repair is regularly no longer available.
Conditions attach to the exception which are often overlooked in practice – and breaching them causes the claim to fall away retrospectively.
The most frequent conflict in total loss cases turns on the residual value. The higher it is set, the less the insurer has to pay – the incentive is plain enough.
It is common for insurers to submit their own residual value offers after receiving the report, often from national salvage exchanges. Under the case law the injured party may in principle rely on the figures in their own report, provided it is based on the regional market and the vehicle has not already been sold.
So the rule is this: do not sell the vehicle before the residual value question is settled. A hasty sale below the figure applied later regularly works against you.
One further point concerns VAT: where a replacement is bought, it is reimbursed only to the extent that it was actually incurred. Anyone buying privately does not receive it on top.
Repair costs, replacement value and residual value – each derived so it can be followed, so that the insurer does not get to dictate whichever route suits it best.
Head office in Schramberg-Sulgen, branch office in Rottweil. For the damage inspection we come to you in any case – on site, at the workshop or at your home.
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