When Does An Insurance Company Write Off A Car

Definition of a Write-off

Turning to an insurance company to help pay for repairs when your car has been damaged or stolen is quite a common practice. When damage to the car is too extensive or the cost of the repairs cost more than the car is worth, the insurance company may deem it a write-off and refuse to pay for the repairs. This process is known as “total loss settlement” and indicates that the insurance company has concluded that, due to the degree of damage caused, the car is incapable of being cost effectively repaired.

Establishing the Value

In order to work out if a car is a total loss to an insurance company, it will typically review the overall damage and then calculate the cost of the repairs compared to the car’s current value. The most important factor that needs to be established is the cash value of the car prior to the incident. A car’s “cash value” is determined by the current market price of the same model and age car in the same area.

Categorizing the Damage

Insurance companies categorize damage in two ways: either “serious” or “repairable”. Serious damage usually involves destruction to the engine, frame, body or interior that is too extensive to repair. Damage that is less severe will be categorized as “repairable”, in which case the cost of repairs should be reasonable enough for the insurance company to find it worthwhile to pay for the repairs.

Car Totaled?

When a car is deemed “totaled”, the insurance company takes ownership of the car and offers the consumer a cash settlement. This amount is made up of the pre-accident market value of the car less any deductible paid. Depending on the insurance policy, this may also include the cost of taxes and/or registration.


In some cases, an insurance company may still authorize repairs to the car, even if the cost of repairs is considered a total loss relative to the value of the car. This is usually out of goodwill or even related to policy terms, as certain insurance policies may stipulate that only a set percentage of the car’s actual cash value may be written off.

Importance of Expert Opinion

In assessing a write-off, it is important that a professional appraiser provides a second opinion. Their report will typically be taken into consideration by the insurer, who relies on the appraiser’s knowledge and expertise in estimating the repair costs and assessing the residual value of the vehicle.

Factors Influencing When an Insurance Company Writes off a Car

For an insurance company to write off a car, there are several factors that the company will take into consideration. These include the type and severity of the damage, the cost of repairs versus the car’s current value, repairable versus serious damage and the market value of similar cars in the same area.

Settlement for the Consumer

The amount of money a consumer will receive in the settlement depends on a few different factors, such as the car’s age, the value of the car prior to the incident, the cost of repairs and any deductibles the consumer may have paid.

Effects on Insurance Premiums

Having a write-off, a consumer may find that their insurance premiums increase when they apply for a new policy, as they will be considered as a ‘high risk’ driver.

Options for Consumers

When an insurance company writes off a car, consumers have several options. These include distributing the settlement money amongst the involved parties, which could include the consumer, the car’s lender and any other party that may have an interest in the car; transferring the title of the car; and purchasing a replacement vehicle.

Re-registering a Written Off Car

Consumers who are considering re-registering a written off car may first need to seek written approval from the insurance company to proceed. It is also necessary to find out what, if any, additional costs may be incurred in order to do so.

Retaining the Salvaged Car

Consumers who choose to retain the salvaged car are able to do so for a fraction of the price. In such cases, the driver is expected to meet repairs costs on their own and get the vehicle evaluated prior to being allowed to register it.

Implications for Insurance Companies

When an insurance company writes off a car, there are legal implications. These may include being required to pay out more than what their initial assessment of the damage had suggested. Additionally, the company might have to cover any additional repair costs for the car if it is re-registered.

Friendly Reminder of Risk

Every time a car is written off, it serves as a reminder of the risk involved in driving a car. It highlights the fact that while driving can be convenient and a nice way to get around, it is often unpredictable and can lead to costly repairs or even a total loss of the car. Insurance provides some peace of mind in such cases, however it only pays out according to certain policies and conditions.

Marjorie Turcios is a seasoned leader and management expert with over 25 years of experience. She has held various leadership positions in private industry, government, and education. She is an advocate for creating win-win solutions and has worked to create successful, lasting change in corporations and organizations. Marjorie is an award-winning author of several books on leadership, mentoring and coaching, and effective communication skills. Her passion is to help others discover their potential and reach new heights in their professional life through her writings. Marjorie resides in Dallas, Texas where she enjoys spending time with her family, traveling to different places around the world, and speaking at conferences about her areas of expertise.

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