Why do they deduct an amount for the wreck the unexpired portion of my registration and the CTP insurance?
When you are not insured and pursuing the at fault party, your entitlement is to “common law damages” to compensate you for your loss.
The common law has developed over many years and in motor vehicle accidents your damage is the amount of money it will take to place you in the position had the negligence not occurred.
The damage in a motor vehicle repair claim is usually made up as follows:
- Repair cost of the damage caused or the market value of the vehicle, whichever the lesser
- PLUS towing costs
- PLUS hire car costs, lost wages or profits (called “demurrage”)
- LESS salvage value (if market value of the car is claimed)
If your car is written off, you are entitled to its market value.
What you would have been able to sell your car for immediately before the loss, this market value includes its on road registration value. If you can get a pro rata refund of your registration from your state road authority then the insurer will generally deduct it from your pay out.
When the car is written off, the wreck can be sold to a Wreckers for parts. As this is the residual value of the car, then it too is deducted from the pay out.
Alexandra’s car is recently registered for $800 for the year. She is driving home and is hit from the rear by John, John is insured and admits he is at fault. Had Alexandra sold her car that day she would have received $5,000. Had she sold it the day before – before she had paid the registration – she would only have been able to sell it for $4,000 as it needed $200 worth of work to get it through registration and registration was $800. Alexandra tows her car to a Wreckers for $300, and they tell her they can sell it for $500.
Alexandra is entitled to the following:
- Market value of the vehicle ($5000) less registration ($800) which is $4200
- PLUS towing costs of $300
- PLUS hire car costs (demurrage) in this case $0
- LESS salvage value (when it is written off) in this case $500.
The total Alexandra is entitled to is therefore $4000
John’s insurer offers her $4,000, which Alexandra accepts.
Alexandra also has her $500 from the Wrecker and her $800 back from the Roads Authority.