What happens if insurance writes off your car?

Your auto insurance will total your car if it costs more to repair than replace. Compare quotes and policies to learn how different insurers process total losses.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 23, 2020

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Here's what you need to know...

  • If you are in a severe accident, most likely your insurance carrier will total your vehicle.
  • It is vital to copy down all the vital information immediately afterward
  • If you wish to keep your vehicle, most insurance providers will allow you to after paying its scrap value

Every year in the United States, there are thousands of traffic accidents daily. In many cases, one or more vehicles are damaged to the point where they are not cost-effective for the carrier to repair. Quite often, it is often cheaper for the insurance agency to total the car or truck.

According to statistics compiled by The Association for Safe International Road Travel (ASIRT), the average cost to insurance agencies is around $230.6 billion per year in losses due to vehicular accidents.

With that amount of money on-the-line, it makes sense for insurance carriers to reduce overall costs whenever possible, as well as decrease the number of fraudulent claims made by unscrupulous drivers.

Chances are, you or someone you know will be involved in an accident severe enough to warrant your insurance carrier writing your vehicle off. Here’s what you need to know before you find yourself in that situation.

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What to Do When You Are Involved in an Accident

When involved in an accident, regardless of severity, the law states you are required to immediately report the collision to the local authorities.

Whether or not the accident was a simple fender bender or a severe collision resulting in an injury or even death, failure to contact the authorities, as soon as possible, could result in not only losing your license or being fined, but you could even be prosecuted in a criminal court!

After an accident, if you are capable of removing the damaged vehicles from the road, it is highly recommended you do so. Not only will it give you a chance to calm down and gather your wits, but it can also prevent additional motorists from becoming involved in the accident.

If you have a smartphone, you should record everything that occurs from the moment of the accident and onward.

This recording will assist both the authorities and the insurance carriers in determining who is to be held responsible in the event liability is questioned.

Some of the other information you should record includes,

  • The date, time, and location where the collision occurred
  • The name, address, and contact information for everyone involved in the accident —including any witnesses or passengers
  • The make, model, VIN, and license plate of the vehicles involved

Many insurance companies also provide their subscribers with access to printable forms that give clear instructions on what to do in the event of a severe collision. It is a good idea to keep these in your glove-box in the event of an accident.

After having contacted the authorities and collecting all relevant data from the involved parties and witnesses, it is essential to contact your insurance carrier. Many insurance companies would refuse to honor a policy if the consumer failed to report the accident within 24 hours.

If in the event of severe trauma or hospitalization, most insurance companies will offer additional time on a case-by-case basis.

Also, never admit to any liability for the accident. If the authorities or other drivers are pestering you to take responsibility, politely refuse, and give them the contact information for your attorney with instructions that any future questions be directed to her office.

You may provide the police with a simple description of the events as objectively and truthfully as you can remember. Do not try to fill in any gaps at this time.

You are more than likely going to be in a severe state of stress and likely to say things you will later regret. Allow the officer and emergency response crew do their jobs without becoming a nuisance.

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What to Expect Next

If they deem it not worth repairing, it is considered a total loss or write-off.

A vehicle is considered to be a total loss if the costs of the repairs are greater than the current bluebook value of the vehicle.

It may also be considered a total loss if the frame of the vehicle was cracked during the impact — even if the damage is perceptibly minimal.

Regardless of fault and as long as your policy is in good standing with full-coverage — your insurance carrier will pay for the cost of replacing your vehicle and provide access to a rental vehicle until you receive your policy dividends.

Unfortunately, many consumers will often opt for lower-cost, partial coverage. Liability coverage will only pay for the damages to the other party’s vehicle and medical expenses. Additionally, it rarely provides funds for a rental vehicle.

Typically, this type of insurance is purchased by young adults, teenagers, and those that are driving a vehicle that is not very valuable.

Also, as unfortunate as it may seem, if the authorities determine the other party was at fault, and they do not have insurance coverage, liability insurance will rarely cover the damages against your vehicle. If you can afford it, full-coverage is your safest bet.

When choosing the correct policy, it is important you shop around for a coverage plan that meets your expectations and offers you the amount of coverage you need to protect your investment.

There is a good chance you may find a carrier that will provide full coverage for a rate comparable to what another would charge for only liability coverage.

How Companies Determine the Value of a Vehicle

Insurance companies employ thousands of adjusters, mechanics, and other people who have in-depth knowledge regarding a vehicle’s value. Adjusters are consulted by the carrier to determine the price of the vehicle at the time of the accident.

They will start by basing your vehicle’s value on another similar vehicle, then will make additions or deductions to that price based on many factors, which can include the amount of mileage on your vehicle, upgrades, aftermarket parts and equipment, and the value of personal items in the vehicle at the time of the accident.

If the adjuster determines your vehicle meets the criteria for a write-off, the carrier will use this information to create a basis of value for your car, including taxes, and will offer you a cash settlement for that amount.

It is up to you how you choose to use the money they offer.

It is important to note after they have made the offer of settlement and you choose to accept it the insurance company will take possession of your vehicle.

If the vehicle has high sentimental value or is rare, it may be in your best interest to keep the vehicle and put it in storage or repair it yourself.

Some insurance companies will allow you to purchase the car back from them after you have accepted their cash settlement offer. To be safe, ask your insurance agent before signing any documents.

What if I Disagree with the Amount Offered?

If the amount offered does not meet your expectations, you can ask your agent to refer you to his supervisor and discuss the matter with him or her.

Often insurance companies will not be able to calculate the value of heavily modified vehicles. It is up to the owner to prove the higher-than-normal value of these vehicles.

Because of this reason, keep all your receipts whenever you have any aftermarket goods, services, or modifications were done to your vehicle.

Hopefully, you will never have to go through the agony of a severe vehicle accident, but be prepared to handle matters in a manner that is most beneficial to yourself and your pocketbook!

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