write_offEvery vehicle owner dreads the day that his vehicle is damaged, taken to a repair shop and the damage assessed.

Few of us have the knowledge to make a judgement on the cost of repairs – and we are always guessing what the potential damage might be. Sometimes we are informed that the car is not worth repairing/ beyond repair – and this is usually communicated to us in terms such as “the car is a write –off” or “the car is totalled” or “is a total loss”.

This decision to write-off the vehicle has often resulted in disagreement between the insured client and his car insurance company – and we would like to provide in this blog post some insight to how this decision is made.

The car insurance policy and the decision to write-off the vehicle

As a starting point we need to consider the terms and conditions of the car insurance policy. The car insurance policy is an agreement between the insured vehicle owner and the car insurer and stipulates the obligations and terms and conditions under which insurance cover is provided.

Car insurers set the standards by which they determine whether or not a car is totalled or written –off , and need to disclose this to the client in the terms and conditions of the policy. The car insurance policy provides cover for vehicle loss and damage – and the car insurance company will use professionals to calculate the value of such loss or damage.

What happens when my vehicle is damaged?

After an accident or other vehicle damage, your insurance company will send a qualified assessor to determine the damages of your car. This assessor (also known as an adjuster) calculates the damage of your vehicle in monetary terms and this assessment is than compared with the actual value of the vehicle.

Should it cost more to repair the vehicle to an acceptable and roadworthy condition than the actual value of such a vehicle, the car insurer will decide to write-off of the vehicle….

Which factors are considered by the assessor / insurance company?

It is important to note that there are more factors to be considered than merely the physical damage to the vehicle in making a decision whether it is economically feasible to repair the vehicle.

Factors to be included in the assessment are:

• The cost to repair / fix the vehicle and meet the necessary road safety measures
• Storage costs while the vehicle is being repaired – These are considered by some international car insurers although some car insurers in South Africa have rejected this as a factor to be considered
• Hire charges – if the car insurance policy covers the provision of a rental car while the vehicle is repaired , then these costs of the rental car can effect the decision by the car insurance company as it presents a higher costs to the insurer. Some car insurers in South Africa have however confirmed that they do not consider car hire as a factor in the write off calculation. They believe the client pays a premium for this and it should not be part of the write off decision.

It is important to be aware of the fact that not all car insurers use the exact same formula in the calculation of whether to write-off the vehicle. It is suggested that you communicate with your car insurer in this process to enquire how this decision is made.

Please note that other factors to be considered include parts availability, age and condition of the vehicle before deciding to write it off. In many cases one might wait for parts too long as they are imported. Structural damage is also a deciding factor as damage to a chassis or roof can be repaired, but one would not risk safety on a vehicle even after repairs are done. In these marginal cases one most likely write off the vehicle.

The guideline the industry uses when deciding to write off or not is 70% of the value of the vehicle.

Actual cash value of the vehicle

If the value of repair exceeds the actual cash value of the car, and also if it cannot conform to road safety measures, it may be termed written-off or totalled. What is this actual cash value and how is it calculated?

Actual cash value is often calculated as ‘fair value’ which means the values at which a willing buyer and a seller would exchange a vehicle for in arms-length transaction. To calculate the actual cash value the insurer will closely monitor trade publications to value the vehicle, amending these figures for the age, condition and mileage of the car.

What happens to the vehicle after it has been written- off?

Your insurance company, once your vehicle insured vehicle is written-off, will make payment under the terms and conditions of your car insurance policy. The insurance company then owns the damaged vehicle and can mostly do what they want with it. This will inevitably mean they will re-sell it to a salvage company to offset their own costs and compensate for the payout.

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9 thoughts on “How do insurers decide a car is totalled/ written-off?

  1. Jenny

    Hi there

    Thanks for this useful article.

    I have a question on this note: I would like to find out what happens if the insurer pays you out 70% of the value of the car and you fix the car yourself but are then no longer insured by the insurer. Surely this does not count as a write off. I’m concerned as I have heard that if your car is written off, then it gets a different code and is considered a ‘remake’ and is then difficult to insure and sell thereafter.

    Thanks for any clarity you can give me on this.

    Kind regards
    Jenny

  2. Resh

    I have a similar question- I have comprehensive cover with my insurer. My car was in a minor accident but has been written off – market value is 37940 and damages were quoted r2600. They are offering me market value less my excess as the amount they will give me if I accept that my car is a write off …  or should I choose to fix the car they will give me 48% of the market value minus the excess which works out to be R14000-  Why are they not offering me the quoted amount for the repairs ie r2600. With that money I will find a mechanic and take on the responsibility for any future issues resulting from the repair. What’s even more strange is that in the assessment report it stated that the car is ‘accordingly not permanently unfit for use as a motor vehicle according to the road traffic act. Can someone please explain why they are not giving the amount quoted instead a percentage of the market value. 

  3. Sibusiso

    This is a fantastic article, probably the only one of its kind in SA (at least as far as my searches have been concerned). I recently bought a salvage vehicle but felt really bad at the price i paid as i honestly think the vehicle is worth much more even prior to an “average” repair job. However i think this process may be discriminating against the insured public

  4. Ek wil net graag weet as die voertuig jou R70 000.00 rand gekos het en jy het al die Turbo vervang wat jou R27 000.00 gekos het en sy boekie waarde is R34 000.00 rand en om die voertuig nou reg te maak kos dit jou R50 000.00 rand dan is dit net so goed en wel dat hulle die voertuig kan afskruif. Kan iemand my asb raad gee of my email asb oor wat staan ek te doen asb. debeer.elsabe@gmail.com. dankie

  5. khanyi

    Hi guys I have Q, my guy friend recently bought a car and took out insurence from the same car company brand, he took named driver insurence cover which wasn’t clearly explained to him that with this cover only he. And his other named drivers can drive the car and that should an unnamed person drive then no cover is provided in the event of an accident! So he had his friend drive him to hospital in his car as he was sick and on the way a drink driver crached into his car. His car insurence now refuses to reapir his car ,they say its a write off ! He’d had the car for just a month and hadn’t yet received the policy document from his insurer to read the fine print stating the terms and conditions so as to fully understand what is covered or not and he thought he had open cover listing regular drivers only to find that he has named driver insurence that only covers himself and his chosen regular drivers. He’s beyond himself with frustration and I’d like to assist him with better clarity as to what he can do and whether the insurence is fair etc.
    Thank you in advance.

  6. Revin

    Hi, I would like to find out how insurers work out how much to charge you when buying your car back?

    I recently had an incident. The road was raining, drove into the puddle unaware that water was standing on the road in that part. Fast forward, the car has been assessed. Water has got into the motor. The motor and turbo will probably be written off. Accordingly to the assessor in these’s cases the car will be written off. I can get the car running again for 70% of the insured value.

    However, if they decide to write it off. What percentage will they use if I wish to buy the car back?

  7. may

    Hey guys since when my car is been financed how do the insurance settle that amount they pay the money and what about me do they buy me a car or what happens I’m not clear with that

  8. Luvuyo

    Hey guys since when my car is been financed how do the insurance settle that amount they pay the money and what about me do they buy me a car or what happens I’m not clear with that do I get another car or can anyone explain to me.

  9. miguel

    What is the chances of me buying my vehicle back after it has been written of don’t I get 1st option to buy it? How do they calculate the price that they want to sell it for

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