Constructive loss of a vehicle under compulsory motor liability insurance
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Total loss of the car or repair: “total” under compulsory motor liability insurance and outside the insurance settlement
The decision about the complete loss of the car or the possibility of restorative repairs affects the amount of insurance compensation under compulsory motor liability insurance and as part of the recovery of damages from the culprit of the accident. Let’s find out when “total” under compulsory motor liability insurance and the complete loss of a vehicle are recognized in a dispute with the culprit of the accident, with examples from judicial practice.
As you know, a victim in an accident has the right to compensate for real damage, i.e. expenses resulting from the loss or damage of your car. Real damage also includes the loss of the marketable value of a car damaged as a result of an accident (when determining the amount of damage in the event of a complete loss of a vehicle, the vehicle is not taken into account).
Total loss of a car under compulsory motor liability insurance: law
The total loss of a car is recognized not only in the case when the car cannot be repaired due to significant structural damage. According to paragraph 18 of Article 12 of the Law on Compulsory Motor Liability Insurance, the complete loss of a vehicle means cases in which
- repair of damaged property is impossible
- or the cost of repairing damaged property is equal to the value of the property on the date of the insured event or exceeds the specified value.
Here the question may arise as to what cost of repairs is taken into account to determine the “total” under compulsory motor liability insurance: taking into account wear or without taking into account wear. To determine the amount of costs for restoration repairs within the framework of compulsory motor liability insurance, an independent technical examination is carried out using a unified methodology, which is approved by the Bank of Russia. This is what clause 6.1 of the “Unified Methodology for Determining the Amount of Restoration Repair Costs for a Damaged Vehicle” says (Appendix to Bank of Russia Regulations dated September 19, 2014 N 432-P):
When making a decision on the economic feasibility of restoration repairs, the destruction and value of the vehicle before the traffic accident, it is necessary to take the value of the vehicle at the time of the traffic accident equal to the average cost of the analogue on the specified date according to available information and reference materials containing information about the average cost of a vehicle, a direct address link to which must be present in the expert opinion. The cost of restoration repairs, calculated without taking into account the wear and tear of components (parts, assemblies, assemblies) to be replaced, and the average cost of an analogue vehicle are subject to comparison. Carrying out restoration repairs is considered inappropriate if the estimated costs are equal to or exceed the cost of the vehicle before the traffic accident (the cost of an analogue).
Let us note that by the Decision of the Supreme Court of the Russian Federation of October 15, 2018 N AKPI18-877, paragraph 6.1 of the unified methodology was recognized as not contradicting the current legislation.
The amount of payment for the total loss of a car under compulsory motor liability insurance
According to paragraph 18 of Art. 12 of the Law on Compulsory Motor Liability Insurance in the event of a total loss of a car, the amount of losses to be compensated by the insurer is determined in the amount of the actual value of the property on the day of the insured event minus the value of the usable remains. In the event of a total loss of a vehicle under compulsory motor liability insurance, its remains remain with the owner of the vehicle.
Total loss of a vehicle under compulsory motor liability insurance: judicial practice
If the liability of the culprit of the accident is insured under compulsory motor liability insurance, then the victim in the accident can receive insurance compensation (even if the victim himself has no insurance or is not included in the compulsory motor liability insurance policy).
In the event that the amount of insurance compensation does not suit the victim, after filing a pre-trial claim with the insurer, he has the right to go to court. Here is an example from practice when an insurance company significantly underestimated the insurance payment. Having disagreed with the amount of insurance compensation (RUB 36,300), the victim went to court. Based on the results of the forensic examination, the destruction of the vehicle was established (the cost of restoration repairs excluding wear and tear was 529,618.40 rubles, the market value of the car was 516,666 rubles). The court found that the insurance company’s obligations were not fully fulfilled and insurance compensation was subject to recovery in favor of the plaintiff, taking into account the payment made in the amount of 363,700 rubles. (Decision of the Leninsky District Court of Krasnodar (Krasnodar Territory) dated October 22, 2018 in case No. 2-10905/2018).
Please note that the amount of insurance compensation based on the results of an independent examination conducted by the insurer is not always underestimated. Thus, the victim went to court to recover insurance compensation from the insurance company in the amount of the difference between the losses determined based on the results of an independent examination (the complete loss of the vehicle was established) carried out by the victim, and the losses determined based on the results of an independent examination of the insurer. However, the forensic examination determined the market value of the car to be less (compared to the conclusion of the victim’s examination and even the insurer’s examination). As a result, the claim of the victim regarding the recovery of insurance compensation was denied (Decision of the Pskov City Court (Pskov Region) dated October 22, 2018 in case No. 2-2025/2018).
Situations are possible when the victim asks the court to recover unpaid insurance compensation from the insurance company in his favor based on the cost of restoration repairs. But after a forensic examination, the complete loss of the car is recognized, as a result of which the amount recovered may be reduced (Leninsky District Court of Voronezh (Voronezh Region) dated September 13, 2018 in case No. 2-2962/2018).
The complete loss of a car can be recognized not only in cases where repairs are impossible, but also in cases of economic inexpediency
Recovery of damages from the culprit of an accident in the event of the death of a vehicle
If the liability of the person responsible for the accident is not insured, the victim has the right to sue the person responsible for the accident to recover damages. Thus, the victim asked to recover the cost of restoration repairs in his favor, because he intended to completely restore his car to the condition in which it was before the damage as a result of the accident. However, the court, based on the results of the forensic examination, decided to destroy the victim’s car (the vehicle was completely destroyed). In this case, the court was guided by the Resolution of the Constitutional Court of the Russian Federation of March 10, 2017 No. 6-P, according to which the amount of compensation payable by the person who caused the harm may be reduced by the court if, as a result of compensation for the harm caused, taking into account the cost of new parts, assemblies, units, there will be a significant improvement in the vehicle, entailing a significant and clearly unfair increase in its value at the expense of the person who caused the harm. The court considered that restoring the car was clearly impractical due to significant damage to engine parts and related units and body parts. And, as a result, satisfying the claim based on the plaintiff’s arguments, in the opinion of the court, would clearly lead to a very significant improvement in his car, which would entail a significant and clearly unfair increase in its value at the expense of the defendant who caused the damage, or would allow the plaintiff to purchase two or more similar cars instead one damaged. The court came to the conclusion that the victim’s car was considered destroyed (the vehicle was completely destroyed) (Decision of the Pervomaisky District Court of Omsk (Omsk Region) dated October 11, 2018 in case No. 2-2169/2018).
Let us note that in the event of recovery of damages for an accident outside of an insurance settlement (for example, when the culprit of the accident does not have insurance, including in the case of fake insurance), another examination technique could be used. Thus, previously, according to the methodological recommendations “Study of motor vehicles in order to determine the cost of restoration repairs and assessment (Methodological recommendations for forensic experts)” (ceased on January 1, 2019 due to the entry into force of the “Methodological recommendations for conducting forensic automotive technical examinations and research of wheeled vehicles in order to determine the amount of damage, the cost of restoration repairs and assessment" dated January 1, 2018), the complete loss of a vehicle ( complete destruction) is understood as the case when the cost of restoration repairs of a damaged vehicle, taking into account the wear of replacement parts, components, assemblies, is equal to or exceeds 80% of its value at the time of damage (Decision of the Kaluga District Court (Kaluga Region) dated September 3, 2018 in case No. 2-5985/2018).
On the issue of insufficient insurance compensation and/or recovery of damages from the culprit of the accident, you can contact the specialists of this project for legal advice. Assistance will be provided by project participants and partners - practicing lawyers with extensive experience in this area of legal relations.
If a car is damaged in an accident and, based on the results of an examination, it is determined that repairs are impossible or are not economically feasible, then the car may be completely lost. If the victim does not agree with the amount of damage in this case, then he can go to court to protect his violated rights.
