After a motor vehicle accident, an insurer will make a decision whether to pay to repair a damaged vehicle or to write it off and pay a lump sum to its owner. The decision to write off a vehicle is typically made where the cost to repair the vehicle is more than its market value . The market value is calculated to be the amount the car would reasonably have sold for, if it had been sold the day before the accident.

The insurer determines the market value by reference to used car price guides and the selling prices for similar vehicles. The insurer does not consider how much was actually paid for the car or how much the vehicle owner still owes on it.

It is not uncommon for the write off amount offered by the insurer to be less than the amount still owed on the vehicle, especially for new or luxury vehicles. When this happens, the result for the motor vehicle owner may that they still owe thousands of dollars to the financing company even after receiving a final cheque.

There are several options available to motor vehicle owners to reduce this potential personal loss both before and after the accident. Before an accident, a motor vehicle owner could purchase a Guaranteed Auto Protection insurance policy through their vehicle financing company. This policy protects the owner by guaranteeing the difference between the market value and the amount still owed on the vehicle.

There are several options for the vehicle owner after the accident as well, besides accepting the insurer’s write off amount. The basis for such disputes can include many factors including the effect of recent costly vehicle upgrades, like the installation of a full set of new tires.

You can speak with the insurer directly to inquire into how they valued the car and dispute the amount personally. Before speaking with the insurer however, do some research. For example, look on the internet for sale prices for vehicles comparable to yours. You may also request an independent arbitration ruling on the value of the vehicle. The arbitration decision would be binding on both you and the insurance company.