Insurers write-off damaged vehicles for a variety of reasons.
Car accidents can be traumatic experiences. Even if you are not injured or in any danger at all, a collision is abrupt and shocking. You may also feel some sadness at the loss of a car you have spent so much time in.
The financial impact on you will depend on your insurance. If you only have third-party insurance, you will not be able to claim for your own damages. The value of your own car is what you get with full coverage car insurance, minus any deductibles. This payout may be what is necessary to repair your car. However, in some cases, your car will be declared a write-off, and you will get paid from its insured value.
How do you tell if your car is a write-off after a collision? Here are the factors insurance companies look at.
When is a car written off?
First, let’s clarify what it means for a car to be written off. A car is considered a write-off when it will cost close to or even more than the value of a replacement to repair. When repairs will cost at least as much as a replacement, the decision to write your car off is straightforward. There is also a lot of sense, however, in writing off a car that will be cheaper to repair but will still come at a high cost.
The reality is that no amount of work will get your car to the same value as it was before the crash. Furthermore, by writing it off, your insurer can cash in on the salvageable parts.
What are the factors that lead to a write-off assessment?
Cost of parts
The simplest variable in the calculation is the cost of new parts required to repair your car. A mechanic will assess your vehicle and determine what parts are required to get it back to its best condition. They will determine how expensive it will be to get these parts, and this will be the start of the equation.
Cost of labor
Cars don’t repair themselves, and the cost of parts is therefore just one aspect of the calculation. The mechanic also needs to calculate how many hours of labor it would take to fix the car and calculate the cost of that labor. They will also calculate the cost of any tools they require to fix the car.
Availability of parts
With some cars, the cost price of the parts does not represent their full value to you. This is because they are imported or rare, and getting the parts will take time and come at a high expense. Therefore, many imported cars have a very low threshold for being written off, and you probably pay more for your insurance premium because of this.
In some cases, the cost of labor is not straightforward either. This is because certain cars require specialized workmanship that most mechanics are not qualified to provide. Electric vehicles often need specialized work and sourcing this kind of labor costs significantly more than the price of a regular mechanic. Parts may even need to be sent to other cities to get fixed by a specialist.
Electric vehicles and imported cars are therefore more likely to get written off in the event of a collision, even if the damage does not seem too bad.
Another aspect your insurer will consider is the value of the salvage. By selling salvageable parts, they may find it more economical to write your car off and pay the full insured value.
Finally, it is important to remember that your car insurance will not pay the original value of the car (unless it is in its first two years under certain policies). They will pay the ‘book price’ calculated for your make and model along with the age of the car. A car that is relatively old may therefore be written off because a second-hand car of that age will cost less than the repairs.
These are the factors considered when determining whether your car is a write-off. Remember that the equation is rarely perfectly straightforward, and what appears to be a strange decision may make a lot of sense in context.