Following a material loss covered by your car contract, your insurer has appointed an expert to quantify the amount of damage suffered by your vehicle.
The expert’s report may come to the conclusion that the cost of the work necessary for its restoration exceeds its pre-loss value.
The insurer is then required to declare your vehicle economically irreparable (VEI) and to trigger a special compensation procedure accordingly, with an offer of assignment as a total loss.
Provided by the Highway Code to prevent the circulation of wrecks and fight against the trafficking of falsified vehicle registration documents, this system meets specific application methods.
However, you remain free to sell your car or keep it within the regulated framework of this specific procedure.
Scope of the VEI procedure (economically irreparable vehicle)
Governed by Articles L327-1 to L327-6 and R327-1 to R327-6 of the Highway Code, the VEI procedure is likely to apply to all motor vehicles subject to registration in France as soon as the conditions following are combined:
- Damage to the vehicle is covered by an insurance contract, regardless of the generating event as soon as the guarantee is acquired (non-responsible accident, responsible accident with or without a third party, fire or explosion, car found damaged after theft, vandalism, climatic event or natural disaster);
- The amount of the repairs is higher than the value of the vehicle on the day of the loss according to the expert ;
- The value of the vehicle before the loss is at least equal to a value defined by an interministerial decision. In the absence of revision since the last decree of April 3, 1998, establishing the minimum value of the insured property at 1,000 francs, it is thus set at €152.45 following currency conversion.
Expert report and conclusions for reparations
1. The expert determines whether the vehicle is technically repairable
In order to accurately assess the amount of compensation due to you in compensation for the insured loss, your car insurer appoints an expert.
Upon examining your damaged car, this approved professional must first determine whether it is technically repairable.
Certain criteria determine the technical impossibility of repairing a damaged vehicle.
This particularly concerns vehicles whose engine compartment or passenger compartment has been destroyed in a fire or those which have been submerged above the dashboard during a flood.
Technical irreparability is also pronounced when structural or safety elements prove to be irreplaceable.
If the vehicle is declared technically non-repairable, the owner generally has no choice but to surrender it to the insurer for destruction. The vehicle is most often seriously damaged and has already been immobilized by the police, with delivery of the registration certificate to the competent administrative authority and/or driving ban (VE or VGE procedure).
2. The expert determines the cost of the repairs with regard to the value of the vehicle
As soon as the repair is possible from a technical point of view, the automotive expert is responsible for evaluating the cost of the repair work on the vehicle, in view of the visible damage.
This costing is compared with its estimated value before loss, known as VRADE (replacement value according to the expert).
If the amount of the repairs appear to be higher than the estimated value, the vehicle is declared economically irreparable.
In this case, the expert report must include a detailed list, item by item, of the repairs to be carried out to restore the damaged car and their respective cost.
For the calculation of the compensation of the vehicle in a total loss, the expert indicates in his conclusions in VEI:
- The VRADE: this replacement value corresponds to the purchase price on the local second-hand market of a vehicle of the same type and in equivalent condition;
- The residual value or salvage value: it corresponds to the redemption value of the damaged car. To determine it, the expert calls for tenders from wreckers in the region and selects the best proposal made to him;
- The difference in values: this is the difference between the VRADE and the residual value.
Consequences of a wreck classification: the VEI procedure
1. The obligations of the insurer
As soon as the insurance company receives the expert report concluding that the damaged vehicle is economically irreparable, it must apply the VEI procedure.
If the claim is guaranteed, this procedure also called the RSV (Repairs Above Value) procedure, requires it to send the insured, within 15 days, a proposal for compensation in total loss with a transfer of his vehicle.
Upon receipt of this quantified offer, you have 30 days to agree to sell your car to your insurer or choose to keep your vehicle. In both cases, the insurer communicates your decision to the services of the Ministry of the Interior.
2. Administrative consequences
In the event of the transfer of your economically irreparable vehicle, the insurer declares the purchase within fifteen days to the vehicle registration system (SIV).
He himself may only transfer the wreckage to a professional buyer for destruction, or even for recovery of parts or repair in the sole case where it is technically repairable.
If you have decided to keep your car, or if you have not responded to your insurer’s offer within the legal period of 30 days, the administrative authority registers opposition to the transfer of the registration certificate (OTCI).
This situation prohibits the transfer of the damaged vehicle, except to an automotive professional. The lifting of this opposition is subject to the repair of the vehicle by a professional, under the control and monitoring of a qualified automotive expert.
In case of disagreement with the costing of the expert in VEI
There is still something to do when you have some disagreement with the cost of experts in VEI.
Let’s discuss them below
1. The VEI procedure reflects a simple economic reality
The classification of a technically repairable car in VEI in fact reflects a simple economic reality, namely a VRADE lower than the cost of the work to be undertaken for its repair.
This categorization of the vehicle as a wreck is thus independent of the existence of deterioration which would make it dangerous and would prohibit its entry into circulation as it is.
A car of an old model, of which only the bodywork has been damaged following an accident, an act of vandalism or a hailstorm, can in fact be declared VEI even though it is in a drivable condition without risk to the safety of road users.
2. Ask the expert to revise his assessment
Upon receipt of the expert’s report, if the replacement value seems underestimated to you, do not hesitate to contact the expert to inform him of your disagreement and ask him to revise the amount retained.
To determine this, he probably carried out a technical evaluation report.
This theoretical method consists in taking as a basis for calculating the last catalog price of the vehicle model.
Corrective depreciation or adjustment coefficients are then applied to this indicative selling price according to the date of entry into service of the car, its mileage, its general state of maintenance, and its price on the market of the occasion.
Your approach will be usefully supported by the production of documents such as the maintenance book for your car, the report of the last technical inspection or recent repair invoices.
These elements, which the expert would not have been aware of before, may enable him to revise his costing upwards. By showing him local ads for similar vehicles with a price higher than his estimate, you can also allow him to reconsider the price of the model on the used market.
It is not uncommon for automobile experts to agree to ratify an upward revision of the VRADE in the light of well-founded and convincing arguments and in the case of well-maintained vehicles.
When the difference between the pre-claim value initially fixed and the amount of the repairs is small, such a revaluation may be sufficient to remove the vehicle from the scope of the VEI procedure.
If the expert refuses to modify the conclusions of his report, you retain the possibility of calling, at your expense, on an expert of your choice in order to carry out a second opinion.
If the disagreement persists, a third-party expert must be appointed before any referral to the courts.
What compensation in the event of an economically irreparable vehicle?
The offer of compensation for the total loss that the insurer is required to send to its insured in the event of expertise concluding in VEI informs it of the various possible options.
These proposals cost according to the conclusions of the expert, the extent of your guarantees, and the application of a possible deductible will allow you to consider the financially most advantageous solution for you.
1. You hand over your vehicle to your insurer
Compensation in the event of transfer is calculated on the basis of the amount of the VRADE. The contractual conditions may reduce the final indemnity by deduction:
- The deductible provided for under the “vehicle damage” guarantee implemented (damage from all accidents, vandalism, hail, etc.);
- The share of responsibility is retained in the event of an accident.
If the automobile insurance taken out is limited to one-third, liability is shared by half thus reducing the compensation paid to 50% of the amount of the replacement value.
If the car is guaranteed in all risks, only a half-excess is subtracted from the VRADE in this same situation of sharing responsibility.
Your contract may also provide for higher compensation if a purchase value, increased value or agreed value compensation option has been taken out.
2. You keep your vehicle as it is
If you do not respond to your insurer’s offer or if you inform him of your choice to keep your car as it is, he will compensate you for the difference in value.
The payment thus corresponds to the amount of the VRADE, after deducting the salvage value of the wreck and the applicable deductibles.
In the absence of repair, the opposition to the transfer of the gray card which is notified to you does not allow you to sell the vehicle to an individual. However, you retain the possibility of negotiating it at any time with an automotive professional (wrecker, repairer or spare parts collector).
3. You keep your vehicle for repair
In this event, the compensation is capped at the amount of the VRADE, less the deductible if applicable. The difference between the cost of repairs and the value of the vehicle before the loss thus remains the responsibility of the insured, as do the costs of the expert responsible for monitoring the work.
This solution is therefore of interest only in the event of a small difference between the value of the car before the accident and the cost of its restoration.
This is all the more so since the assessment of the damage, carried out during the first appraisal before dismantling, may prove to be underestimated with the possible discovery, during the work, of non-apparent damage.
To obtain the lifting of the OTCI, the repair must be carried out by a professional repairer.
It must imperatively be followed by a specially qualified expert who intervenes in control of the operations before, during, and after the works.
Appointed and remunerated by the owner of the vehicle, he delivers a second expert report at the end of the repairs, certifying in particular that:
- All safety repairs have been carried out;
- The car is roadworthy under normal safety conditions;
- It has not undergone any significant transformations and its characteristics still correspond to those appearing on the vehicle registration document.
The transmission of this report in conformity makes it possible to regularize the administrative situation of the car in the SIV and puts an end to the blocking of the transfer of its gray card in the name of a new purchaser.
If you wish to terminate your car contract after having refused your insurer’s proposal for total loss, you must provide proof of the destruction or repair of your vehicle or proof that you have taken out a new one.
A contract guaranteeing it with another insurance company (article L211-1-1 of the Insurance Code with effect from July 1, 2021).