Fictitious settlement

Fictitious settlement - how to get an accident claim paid out

Do I have to have my car repaired after an accident? No, not necessarily. Instead, it is often advantageous to have the liability claim paid out by means of a fictitious settlement. But when exactly is this worthwhile? And what should I bear in mind?

35 percent of accident claims are settled by fictitious settlement

Every traffic accident is annoying, no question about it.

After all, damage to a vehicle always raises a whole host of questions and requirements:
What are the replacement costs? How do I get my vehicle damage replaced? Is this only possible through a repair? Or can I also get compensation?

Yes, that is possible. A good third of accidents are now settled by means of so-called fictitious settlement. A completely legal practice, but not without its pitfalls.

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Definition: fictitious settlement

With a fictitious settlement, you as the injured party have the liability claim paid out instead of having it repaired. The settlement is fictitious – or abstract – because you do not submit a real repair invoice to the opposing liability insurance company, but a motor vehicle appraisal with a cost estimate of the amount of damage incurred – in other words, a fictitious workshop invoice.

FAQ - frequently asked questions

Will I receive a rental car with fictitious billing?

Yes, that is possible. However, you must then prove that you have actually repaired the vehicle damage yourself or, for example, had partial damage repaired in a workshop. It is important that the vehicle is technically roadworthy. The calculated repair duration in the expert report serves as a guideline for the duration of the rental car use.

Why do I not receive VAT on the fictitious invoice?

In a nutshell: You will only be paid the net amount, as no VAT is incurred in the workshop for a fictitious repair. Exception: If you buy spare parts for the repair yourself or commission additional work such as wheel alignment or a light test, you may well be reimbursed the VAT for this on presentation of an invoice.

What is deducted in the fictitious settlement?

Injured parties are not allowed to profit from an accident. Therefore, according to a ruling by the BGH in 2015 (BGH, Ref. VI ZR 267/14), only the lower hourly rates of an independent garage are to be applied for cars that are more than three years old and that were not serviced before the accident, not the hourly rates of a brand garage.

Am I allowed to repair my car even though I have made a fictitious settlement?

Of course. You can also have only partial damage repaired. However, expert opinion-based billing is only worthwhile if you want to have the car repaired privately. If you have the accident damage (or part of the damage) repaired in a specialist garage after the payout, you submit the invoice to the insurance company. The insurance company will reimburse you for the VAT, but this may involve some waiting time.

What does the insurance company pay if the damage is not repaired?

In principle, the other party’s insurance company is obliged to reimburse you for all accident-related costs in accordance with Section 249 BGB. This includes the repair costs incurred, the reduction in value, the loss of use as well as the costs of an expert opinion and expenses for a lawyer. This also applies to fictitious settlements.

In which cases does a fictitious settlement make sense?

Whether and when it is worth settling a claim on the basis of an expert opinion depends on many factors. In general, however, it can be said that it is only worth settling on a fictitious basis if you do not want to take the accident vehicle to a brand-affiliated garage for repairs and if the car is not a total loss. If, on the other hand, you do not want to have your car repaired at all, have it repaired by a friend or simply have it repaired at a later date, fictitious damage settlement is a sensible alternative.

Incidentally, there are no restrictions on the use of the compensation paid out – you can do whatever you want with the financial compensation. Take advantage of our free expert advice(info@amc-gutachten.de) and find out which claims settlement option is best for you.

Prerequisites for fictitious settlement

In order to be able to settle a liability claim fictitiously, the amount of damage must be reliably quantified, preferably by an independent expert opinion. An appraisal-based settlement can only take place if your vehicle has not suffered a total loss. In other words, the repair costs must not exceed the replacement value. If the costs exceed this 100 percent mark, the opposing party’s liability only has to pay out the replacement value less the residual value of the accident vehicle.

The following costs can be claimed in the fictitious settlement:

Repair costs

For this, you absolutely need an expert’s report that quantifies the calculated costs based on the hourly wage of a brand-bound workshop. The duty to minimize damages in accordance with § 254 BGB must be observed: The accident victim is required to keep the repair costs as low as possible. A cost estimate is not sufficient.

Impairment

After an accident, you can no longer resell your car for the same price as before; this is referred to as a mercantile reduction in value. This difference in value must also be settled in the case of a fictitious settlement (see judgment of Regensburg Regional Court, ref. 22 S 90/18, 2019).

Loss of use

If you actually have your accident vehicle repaired, you are entitled to a replacement vehicle. You are entitled to compensation for loss of use for the time that a hypothetical repair would take. This damage item is also determined and shown ONLY in an expert opinion.

Expert costs

As the injured party in an accident, the other party’s liability insurance must reimburse you for the fee for an expert. Ideally, your expert will settle the bill directly with the insurance company so that you do not have to pay in advance.

Legal fees

Even if you wish to consult a lawyer for traffic law, the insurance company of the person responsible for the accident must reimburse the fees in full.

Fictitious settlement in the event of economic total loss

If the repair costs after an accident are more than 100 percent of the calculated replacement value, this is referred to as a total loss. In such cases, the liable party of the damaging party will not agree to a fictitious settlement. In the event of a total loss, the other party’s insurance company only has to pay out the replacement costs for an equivalent vehicle – minus the calculated residual value of the car involved in the accident.

If the insurance company is not provided with proof that the vehicle is ready to drive and has been repaired, it will be settled on the more favorable variant, namely on a total loss basis.

Sample calculation: fictitious settlement

Let’s assume your vehicle has a replacement value of 10,000 euros, the calculated residual value is 4,000 euros and the depreciation is 500 euros. With repair costs of 6,500 euros net, the following calculation would result:

Replacement value: 10,000 euros
Repair costs: 6,500 euros
+ reduction in value: 500 euros

= You will receive: 7,000 euros
(vehicle still roadworthy, holding period 6 months)

In addition, compensation for loss of use and value-added tax on invoices relating to the claim must be paid if the relevant evidence is provided.

In the event of a total loss or a total loss settlement, i.e. if the repair costs amount to 130% of the replacement value, the insurance company only pays out the replacement costs. With this rule, no fictitious settlement is possible. The replacement cost is calculated as follows:

Replacement value: 10,000 euros
– Residual value: 4,000 euros

= You will receive: 6,000 euros

Here, too, loss of use as well as re-registration or deregistration fees would be added if proof is provided.

If a repair confirmation from the expert can be presented, the insurance company would have to pay an additional 1,000 euros in order to reach the 7,000 euros calculated in the first variant. Alternatively, the injured party can also sell their car for the residual value of 4,000 euros to the buyer stated in the expert opinion. This would leave him with 10,000 euros – and thus enough money to purchase a suitable replacement vehicle.

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Fictitious billing: with a cost estimate or better with an expert opinion?

After an accident, many accident victims first go to their trusted specialist garage to get a cost estimate. However, this is not the best solution, especially for damage beyond the minor damage threshold. For an abstract settlement, it is particularly important to calculate the repair costs as accurately as possible. Relevant vehicle values, repair duration, depreciation, replacement value and residual value are not shown in the cost estimate.

An independent expert opinion is the better choice here. In addition to the pure repair costs, this also quantifies the loss of use and the reduction in value. However, you should not rely on an expert provided by the opposing insurance company, as they can never be neutral. As the victim of an accident, you have the right to expert advice and support from your own independent expert.

Please call us on 0173-154 37 47 and we will be happy to assist you at any time with our many years of expertise.

Fictitious settlement: template for a correct letter to the insurance company

An informal letter is sufficient to notify the other party’s insurance company of a fictitious settlement. If you have called in an expert, he will of course take care of the correspondence for you. The following wording has proved useful if you wish to have the accident damage paid out:

Dear insurance company [XYZ],
I would like to ask you to pay me the accident claim in accordance with the TÜV SÜD report.
My bank details:
Max Mustermann, IBAN [123456789], BIC [123ABCD]
Versicherungsnummer: [123456789]
Best regards and many thanks,
[Max Mustermann]

What can be reduced in the fictitious settlement?

Insurance companies are commercial enterprises that naturally only want to pay out just as much money as is absolutely necessary. Particularly in the case of abstract settlements, insurers very often try to dispute the amount of damage and the recoverability of the individual values. In particular, wages, transportation costs (e.g. to the paint shop or wheel alignment), painting costs, residual value, reduction in value and vehicle price mark-ups are typical damage items that regularly become the subject of dispute.

An experienced motor vehicle expert such as AMC Gutachten (phone 03335 – 60 59 807) knows the tricks of the trade and will help you to assert your claims to the full extent. In the event of a dispute, we can also recommend an experienced lawyer for traffic law.

Here are some examples of possible reductions:

Residual value and depreciation

These are often calculated lower by an insurance company expert than by an independent expert. Insist on your right to a neutral expert!

UPE surcharges

According to current case law, these price surcharges levied by the manufacturer on the recommended retail price (RRP) for spare parts are indeed billable – provided they are customary in the region of the injured party.

Wages

The expert calculates this using the hourly rates of a brand workshop. The insurance company refers to the obligation to minimize the damage and only wants to reimburse the (cheaper) repair at an independent garage. However, if your vehicle is less than 3 years old and has a checkbook, you are entitled to have it repaired at a brand-name repair shop.

Transportation costs

Transportation costs are also often the subject of dispute between the injured party and the insurance company. These costs are incurred if the accident vehicle has to be transported from the workshop to the wheel alignment or paint shop, for example. These costs can not only be settled if they are actually incurred, they can also be fictitious.

Good to know:

If you have repaired your accident-damaged vehicle yourself and can submit a confirmation of repair to the insurance company, it is often possible to claim for previously reduced items from the expert report.

Conclusion

Each case must be considered individually and requires individual advice and procedures. Simply make use of our expert help.

We are your partner in the event of a claim

After In many cases, paying out the amount of damage by means of a fictitious settlement can be a worthwhile alternative to repairs at a specialist garage. However, it is important to be aware of legal pitfalls, local peculiarities and attempts by insurers to reduce the amount. It is advisable to rely on the specialist advice of certified experts AMC Gutachten in order to assert your claims easily, safely and without worry. Write to us (info@amc-gutachten.de) or call us (03335 – 60 59 807), we will be happy to provide you with practical and transparent advice on your options and handle the entire claims process for you.