Archive for January, 2009

The whole point of car insurance is to protect ourselves financially from accidents whether it be our fault or someone else’s depending if you have comprehensive or third part cover. But one way that insurance companies can keep the cost of car insurance premiums down is by dealing with the aftermath of an accident efficiently.

We are not talking about payouts here or medical care, but how they resell that damaged vehicle that probably is now has the title of a salvage car. By ensuring they get some sort of return from these insurance write offs can pump money back  into the company to protect their bottom line profits and so be able to offer cheaper motor insurance.

Take for example a typical that is insured for the value of £4000. This is then paid out as the event of an accident that repairable salvage item can then sold at special trade auctions up and down the UK. It is possible that this repairable salvage car can be sold for £1000, reducing that insurance loss by 25%. Of course every insurance write off has a different level of damage and so it is hard to gauge the direct return, but of it is averaged out over the year, it is possible that a sizable return can be made from these salvage vehicles and the level of return is based on the processes used to resell that vehicle.

However recovery costs can also be significant, so they often use third party companies to handle these salvage cars, including the sell off of these vehicles that normally happens as an online auction. Efficiency is the key to success here, as breakdown recovery, storage costs, further transport and then the fees by third party salvage yards can add up and a vehicle that had some value may now be worth less than the sum of all these services. Sometimes only effective insurance assessors can make the difference between a positive return or a negative one.