What is the difference between total in CASCO and OSAGO, what is complete, actual, and constructive death, what to do if the car is recognized as total?
The term “total” (from the English total – full, aggregate) in insurance policies means the complete or constructive loss of property, such as a car, in the event of an insured event. Already based on the definition itself, it is clear that there are certain differences that need to be understood. After all, the procedure for calculating and the amount of insurance payment depends on this.
Total in insurance – what is it?
The destruction of property is always bad, trouble! And in the event of such an insured event, the victim has only one hope – for full compensation for the damage caused by the insurance company. However, the amount of compensated losses in different cases is determined by the insurer in different ways. Depending on the classification of the total, the insurance company will apply the appropriate method for calculating compensation, and the result (payment amount) will be different. If there is any!
Total in vehicle insurance
The definition of the total in CASCO insurance (voluntary insurance) and OSAGO ( compulsory insurance ) may differ since these contracts are regulated somewhat differently.
- OSAGO is based primarily on the fed. the Law of 25.04.2002 No. 40-FZ “On Compulsory Insurance of Civil Liability of Vehicle Owners” (hereinafter referred to as the OSAGO Law) and regulations of the Bank of Russia.
- CASCO insurance “relies” on the provisions of Chapter 48 “Insurance” of the Civil Code of the Russian Federation, Fed. Law of 27.11.1992 No. 4015-1 “On the organization of insurance business in the Russian Federation” (hereinafter – Law No. 4015-1), Fed. Law of 07.02.1992 No. 2300-1 “On Protection of Consumer Rights”.
For example, according to paragraphs. a) clause 18 of Art. 12 of the OSAGO Law, the complete loss of a vehicle is understood as cases in which repair of a damaged car is impossible or the cost of such repair is equal to its value as of the date of the insured event or exceeds the specified value. Therefore, in the event of a total in OSAGO insurance, compensation (within the sum insured) shall be subject to the actual value of the victim’s property on the day of the insured event, minus the value of the usable balances (clause 4.12 of the Bank of Russia Regulation “On the rules of compulsory civil liability insurance of vehicle owners”) …
Total in CASCO insurance is determined differently: based on the rules of a particular insurance company and the terms of its CASCO policy. In this regard, the procedure for determining the total will differ slightly for different insurers.
Total in CASCO car insurance
In simple terms, the total in CASCO insurance is the loss of a vehicle. Depending on the terms of the insurance rules, it can be characterized as:
- complete actual loss – irrecoverable loss of a vehicle;
- complete loss – such damage to a car when, according to the conclusion of the insurer’s experts, it is pointless to carry out repair and restoration work;
- constructive loss – causing such damage to a car, in which its repair turns out to be economically inexpedient due to the fact that restoration costs will amount to or exceed 65% (and for some insurers – 75%) of its insured value.
Based on these formulations, it is clear that, as a rule, it is pointless to use a car after the total, because the cost of repairing it will be equal to the price of a new car. In addition, the terms of CASCO policies and the insurance rules of some insurance companies provide for the procedure for transferring to the insurer the usable residuals of the vehicle after the total, that is, the conditions on when, where, and what balances will be transferred to him by the owner-car insurer.
The car was recognized as a total for OSAGO or CASCO – what to do?
If the insurer has recognized the complete destruction of the vehicle, or such damage to it, in which it cannot be restored, and at the same time its owner-insured did not violate any restrictions of the contract (policy), in this case, he must be paid insurance indemnity in the number of full insurance amounts in accordance with paragraph 5 of Art. 10 of Law No. 4015-1 (abandon).
In what cases the total insurance will not be paid
Any contract (rules) of insurance contains a list of cases when the insurer is exempted from the payment of insurance compensation. For example, by virtue of Article 963 of the Civil Code of the Russian Federation, the insurer is exempted from payment of insurance compensation if it proves that the intent of the person in whose favor the insurance was made was aimed at the loss (death), shortage or damage of the insured property and that this person wished the occurrence of these negative consequences …
At the same time, in the event of an insured event due to gross negligence (negligence, imprudence) of the insured, the insurer can be exempted from paying insurance compensation only if this is expressly provided for by law (clause 1 of article 963 of the Civil Code of the Russian Federation, clause 31 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated 27.06.2013 No. 20 “On the application by courts of legislation on voluntary insurance of property of citizens”).
How to dispute if the car was illegally recognized as total
In some cases, a situation may arise when the total becomes profitable for the insurer. There can be several reasons, including:
- in case of revaluation of suitable balances (higher than the real value), it becomes possible to save (decrease) insurance compensation;
- in the event of an unfair recognition of the threshold amount of damage (65% – 75%), it becomes possible to then restore the car, which has been “tinted” in this way, and sell it;
- in case of recognition of the total, the terms of the policy allow not to return the unused part of the insurance premium to the policyholder.
Can such actions be disputed? If the insured car owner sees that the actions of the insurance company to settle the damage are suspicious (for example, when the amount of damage is adjusted to the total or a decision is made on the total, although the car is subject to restoration), he needs to obtain evidence of the real damage caused to his car.
In such cases, the car owner has the right to conduct an independent technical examination or assessment, the costs of which may be regarded in the future as losses or legal costs (clauses 99 and 100 of the Resolution of the Plenum of the RF Armed Forces dated 26.12.2017 No. 58 “On the application of legislation by courts compulsory insurance of civil liability of vehicle owners “).
Having such evidence in hand, you first need to try to resolve the issue out of court by filing a claim with the insurance company, and if this does not help, with the Financial Commissioner (Ombudsman) Service. In the most difficult cases, you can file a complaint directly with the Bank of Russia. And only after exhausting the listed possibilities, go to court.