My Write Off

Do Warranties Add Value to Total Loss Settlements?

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Steven Carvalho

Steven, with over 20 years in the industry, has expertise in claims, estimating, extrication, repair, and appraising. He founded "MyWriteOff" to help clients obtain fair insurance settlements for total loss vehicles.

A common question arises when your vehicle is declared a total loss: “Do warranties add value to total loss settlements?” This question stems from our often substantial investment in warranties, protection plans, and regular maintenance services to keep our vehicles in top-notch condition. This article aims to clarify this point and provide deeper insights into how total loss settlements are calculated.

When an accident totals your vehicle, the insurance company is obliged to compensate you for your loss. This compensation is based on the vehicle’s actual cash value (ACV) – its market value immediately before it was damaged. The ACV encompasses the vehicle’s age, mileage, make, model, and overall condition. In addition to these fundamental considerations, certain value-added features permanently affixed to the vehicle can also impact the ACV.

However, the warranties seem like valuable assets at the outset and do not typically add to this value. Warranties, by definition, are service agreements or guarantees offered by manufacturers or dealers to cover specified repairs over a certain period. They aren’t physical components of the car that add to its intrinsic value. Other services, such as oil changes, rust protections, and additional service agreements, also fall into this category. Although they undoubtedly contribute to the vehicle’s longevity and performance, they generally do not increase the ACV in the eyes of most insurers.

It’s worth noting that while this is the general approach, the specifics can vary among different insurance companies. Some insurers might consider warranties or additional service agreements in their settlement calculations under certain unique circumstances. Therefore, it’s crucial to understand that calculating total loss settlements is not universally uniform.

To navigate these complexities, it’s highly advised to consult with an insurance professional or adjuster or diligently review your policy’s terms and conditions. Doing so will equip you with precise insights into how your insurance provider calculates the value of a total loss vehicle, enabling you to navigate the settlement process more effectively.

Remember, while warranties and additional service agreements may not directly contribute to your vehicle’s ACV, they hold significant value in other ways. They offer peace of mind and potential savings on unexpected repairs, often improving the vehicle’s resale value. So, while they may not increase the settlement amount in the event of a total loss, they can certainly provide substantial benefits during the vehicle’s lifespan.

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