Residual value: What your car is still worth after an accident
Once the initial shock of a car accident has worn off, many car owners ask themselves: What is my damaged vehicle still worth? Read here how to determine the residual value of your car and why this figure is so important for claims settlement
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Overview
FAQ - frequently asked questions
There is no general rule of thumb for this, so there is no one-size-fits-all answer to this question. Individual circumstances have a major influence on the decision. Therefore, always seek advice from an expert who will weigh up all the arguments with you.
The less the insurance company has to pay, the better it is for their balance sheet. As the residual value is deducted from the amount paid out, it is advantageous for the insurer if the residual value is as high as possible.
In the event of an economic total loss, the residual value is deducted from the calculated replacement value of the car before the accident. The rule is replacement value – residual value = amount paid out (plus costs for re-registration, loss of use, conversion costs, etc.).
Neither of the two. As the injured party, you can submit the repair invoice or a cost estimate(extremely disadvantageous, as no residual value is shown here). It would be better to submit an accident report, on the basis of which the repair costs are settled. In the case of a total loss, however, the difference between the replacement value and the residual value is paid out.
The Schwackel list is not suitable for determining a serious residual value, as it only predicts depreciation due to wear and tear and market behavior, but does not take sufficient account of the extent of damage. For this reason, a vehicle appraiser obtains regional offers from buyers and dealers and prepares bidding procedures on residual value exchanges. On this basis, he quotes a reliable amount in the expert report. These values are binding for the bidder, but optional for the injured party. The insurance company can therefore use this amount for settlement and deduct it from the claimant’s claim.
As the owner of the car involved in the accident, it is your responsibility to sell it at its residual value. If you have called in a motor vehicle expert (AMC Gutachten, phone 03335-605 98 07), he will name a reputable prospective buyer (residual value bidder) including the purchase price in his report and can take over the entire process.
On the one hand, the owner of a car wants to know what his vehicle is still worth after a traffic accident and at what price he can sell it. On the other hand, insurance companies are often unable to settle a claim conclusively without this value, especially if it is an economic total loss.
What does the insurance pay?
If the question of fault has been clarified, i.e. if you were involved in an accident through no fault of your own, the other party’s liability insurance must compensate you for the damage incurred. How much this compensation payment is ultimately depends on numerous factors, including the age and condition of the car involved in the accident as well as the residual value. As soon as a repair is no longer worthwhile due to an economic total loss, the insurer will only reimburse the replacement cost (replacement value minus residual value).
Please note: In the event of a total loss, the injured party is obliged to sell the accident vehicle as quickly as possible due to the duty to mitigate damages in order to avoid demurrage costs. If the liable party of the other party in the accident makes a higher residual value offer and you have not yet sold your car, you must accept the offer – even if this means a lower insurance payout amount for you.
How is the residual value determined?
A look at the Schwacke list for used cars is not enough to determine the residual value. This was named after the vehicle dealer Hanns W. Schwacke, who published the first list of this kind in 1957. The Euro-Schwacke lists car values based on vehicle type, mileage, year of manufacture and equipment – special equipment is not taken into account. This means that damage to your vehicle has no influence whatsoever. This means that no residual value can be determined.
Instead, a vehicle appraiser obtains offers from buyers and dealers on the regional market. Bidding procedures on residual value exchanges are also consulted. On this basis, your expert can calculate a reliable amount.
You should therefore contact an experienced expert such as AMC Gutachten (info@amc-gutachten.de), who is familiar with the regional particularities and current case law.
When do we speak of a total loss?
Special case: Residual value in the event of a non-genuine total loss (new price compensation)
Residual value: an important figure in claims settlement
The residual value is less important for the owner of the car involved in the accident than for the liability insurance company. If an injured party decides not to have the damage to their car repaired, they can have the amount paid out by means of a fictitious settlement. The expected repair costs are determined exactly in the expert report. If these are more than 100% of the replacement value, the vehicle is an economic total loss. In this case, the injured party is paid the difference between the replacement value and the residual value, the so-called replacement cost.
The vehicle involved in the accident can now be sold to the residual value bidder stated in the expert opinion. If the injured party sells the accident vehicle for a higher amount, the additional proceeds must be reimbursed to the insurance company (obligation to mitigate damages).
The residual value in the expert opinion
In an expert report, the vehicle appraiser lists the exact extent of the damage, the current condition of the vehicle and the reduction in value. He also determines the residual value of the unrepaired accident vehicle by contacting regional buyers and residual value exchanges in order to obtain reputable purchase prices. The highest bid is shown in the appraisal – this value forms the basis for all further calculations.
According to several rulings by the Federal Court of Justice (BGH), including one from 2016 (BGH 2016, Ref. VI ZR 673/15 ), only bids from reputable dealers within a radius of 100 kilometers must be considered. The regional market is decisive.
Exception: The injured party is a company that is active in the purchase and sale of used vehicles, for example car dealerships, vehicle dealers or leasing companies. It is reasonable to expect them to obtain purchase offers from a special market, such as national residual value exchanges on the Internet, which may be significantly higher than regional bids ( BGH ruling from 2019, case no. VI ZR 358/18 ).
Excess residual value - and now?
You have these options after an accident
- You have the option of submitting an expert report to have your vehicle repaired.
- Secondly, there is the option of a fictitious settlement if you do not want to have your vehicle repaired (or want to do it yourself and then logically do not receive a repair invoice). You will then receive the calculated repair costs and can dispose of the amount as you wish.
- If your vehicle has suffered a total loss (this is the case if the repair costs are higher than 130 percent of the calculated replacement value), the third-party liability insurance of the damaging party will not agree to a fictitious settlement. The settlement will be made on a total loss basis.
- In the event of a total loss, the opposing insurer only has to reimburse the replacement cost, i.e. the cost of procuring an equivalent vehicle minus the calculated residual value.
As the injured party, you are entitled to compensation after a car accident. The other party’s liability insurance and compensation for all accident-related costs such as loss of use, rental car costs, reduction in value or compensation for pain and suffering.
Conclusion
Is a glance at the Schwacke list enough to determine the residual value? Anyone who thinks this way is ill-advised.
Residual value is an important factor in the claims settlement process and should never be treated lightly. An independent appraiser such as AMC Gutachten (phone 03335-605 98 07) knows the regional particularities as well as the current legal situation and can provide you with a reliable residual value offer based on its wealth of experience.
This will not only make it easier for you to communicate with the opposing insurance company – it will most likely also add a few euros to your account. Feel free to ask us, we will be happy to help you at any time!
