Will you be able to replace your write-off?

Well, the older your car, the bigger the problem, because if your car’s repair bill amounts to 70% or more of the current retail value of the car, the car will be written off.

So if your car has depreciated a lot, a fairly minor accident will have your repair bill easily topping 70% of the car’s value, and your insurer will refuse to repair it, and insist on writing it off.

And as many have discovered, that pay-out often doesn’t prove to be enough for you to buy a similar car as a replacement. 

A listener's story 

Take East Coaster Bevan Andriés’ experience.

His 2007 Toyota Fortuner 3.0 D4D 4x4 was written off by Discovery Insure after it was involved in an accident last month.

 The insurer initially offered him R153 000 as a pay-out, which didn't sit well with him, as he believes he could have sold it for R200 000, given that it was in immaculate condition, and had done mileage of only about 125 000kms.

Bevan insured his car for its retail value, which is the average price a car dealer would sell it for, believing that he’d be covered if his car was stolen or written off.

On getting that R153 000 offer from Discovery Insure, he began a countrywide search for a Fortuner of the same model, age, condition and mileage as his. 

And of the 59 Fortuners advertised for sale on major vehicle retail websites, the cheapest same model Fortuner he could find was R170 000, and it had double the mileage that his written-off one had.

The average price of all the Fortuners was about R192 000, and the average price of those with a similar mileage to his was R201 000. 

“So it is obvious that it is not possible to replace my vehicle with R153 000,” he told the insurer.

He said he was willing to accept R190 000. Discovery Insure then upped its offer to R168 000 to account for the low mileage and good condition of the vehicle. But the company won’t budge from that.

Discovery Insure sources its car values from a standard industry source - the Auto Dealer’s Guide published by Transunion Auto Information Solutions.

Asked to explain the price gap, Discovery Insure's technical marketing head Philippa Wild said TransUnion looks at the actual prices vehicles are sold for and not the (much higher) advertised prices, which is standard industry practice.

So, she said, the Fortuner prices Bevan got were from adverts, not what they actually sold for.

Bevan’s experience suggests that car dealerships are highly negotiable on the price of their used cars, but he insists that’s not the case, and that he couldn’t get any of them to drop more than 5% on their advertised sales price.

It explains why some insurers, Discovery Insure included, offer a form of “gap” cover to those whose cars are written off or stolen.

Discovery calls theirs Retail Value Booster which adds 15% to their pay-out. But it comes at the cost of an additional premium, of course, and it must be taken out before you suffer the loss. 

So that’s certainly worth considering, although it doesn't seem right or fair that you should need it.

A listener who called in during the show suggested that the insurer be made to find a similar Fortuner for Bevan at the price they paid him. 

I recently asked Transunion how it came by the car values which feature in its Auto Guide - from about 30 000 records of vehicle purchases and sales from around 1 100 dealers across the country every month, I was told.

If you’re a numbers person, and you want to know what you’d be offered as a pay-out by your insurer if your car was stolen or written off after an accident, you can access that information from the same source as the industry relies on - Transunion.

It will cost you just R10 and you get it by going to www.carvalue.co.za - you get one free valuation on registering.

It’s also handy to assess whether a trade-in offer you’ve been given is fair or not.

Meanwhile, Bevan is laying a complaint with the Ombudsman for Short-Term Insurance.

Another listener tweeted: “So what car insurers are the most reputable?”

Well, I daresay that depends on who you ask, but if you are after impartial, statistical information about how insurance companies deal with claims, you can find it in the Ombudsman for Short-Term Insurance’s annual report.

The insurance companies’ claims statistics have since 2012 been laid bare in the report, including the percentage of repudiated claims which the Ombud's office overturned in favour of the consumer. That statistic is very revealing because it gives you an idea of how fair the company’s claims decision were. To see all the stats and compare short-term insurers' claims statistics, go to www.osti.co.za and click on Annual Reports, 2015.

Watch out for water-damaged cars 

An industry source phoned me after the show to warn that the cars which were damaged in this week’s downpour are soon going to end up on auction floors.

“This won’t be revealed, in many cases, and the cars will drive okay at first, but when corrosion sets in in the computer box, the problems will start,” he said. "And replacing that will be very expensive."

Auction cars are sold “voetstoets” - without a warranty - so be very wary. Ask the question: “Was this car written off after being water damaged?”

R140 will buy you a Transunion Car Check report, providing key bits of the car’s history. Click here for details www.carvalue.co.za.