Does car insurance cover a write-off?

Whether you'll get a check depends on where you live — and who was at fault.

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What is a write-off?

If your car insurance will pay to fix your car after an accident, it’ll also pay you the value of the car if it’s totaled. But what it means for a car to be totaled depends on what state you’re in.

A write-off, also known as a total loss, is what happens when a car has sustained so much damage it’s unsafe to go back on the road, or it is still safe to drive but is not worth the cost to repair.

While regulations may differ between states and counties, insurers in the US generally use one of two formulas to calculate whether a vehicle should be written off.

Total loss ratio vs. total loss formula

Total loss ratio. Calculated as cost of repairs divided by the actual cash value of the vehicle. States who use this formula set their own limits regarding how high the total loss ratio can be before the car is considered a write-off. This number varies from state to state but generally falls between 50% and 100%.

Total loss formula. If the cost of repair plus the salvage value exceeds the actual cash value of the vehicle, the car is considered a write-off.

  • salvage value + cost of repair > cash value of vehicle = write-off
  • salvage value + cost of repair < cash value of vehicle = repair

State laws for total loss threshold

Alabama75%MontanaTLF
AlaskaTLFNebraska75%
ArizonaTLFNevada65%
Arkansas70%New Hampshire75%
CaliforniaTLFNew JerseyTLF
Colorado100%New MexicoTLF
ConnecticutTLFNew York75%
DelawareTLFNorth Carolina75%
Florida80%North Dakota75%
GeorgiaTLFOhioTLF
HawaiiTLFOklahoma60%
IdahoTLFOregon80%
IllinoisTLFPennsylvaniaTLF
Indiana70%Rhode IslandTLF
Iowa50%South Carolina75%
Kansas75%South DakotaTLF
Kentucky75%Tennessee75%
Louisiana75%Texas100%
MaineTLFUtahTLF
Maryland75%VermontTLF
MassachusettsTLFVirginia75%
Michigan75%WashingtonTLF
Minnesota70%West Virginia75%
MississippiTLFWisconsin70%
Missouri80%Wyoming75%

Case study: Nissan Altima

For example, let’s say you drive a 2009 Nissan Altima, which is worth about $7,000 according to Kelley Blue Book. If you get in an accident that causes $5,000 worth of damage, the total loss ratio is 71%.

Going off our total loss ratio of 71%, the 2009 Nissan Altima would be considered a write-off in places like Ohio and Minnesota, but not in North Carolina or Texas.

Kelly Blue Book mentions that the salvage value of a car is roughly 50% of its original value, which works out to $3,500 in our case. Since the cost of repairs ($5,000) + the salvage value ($3,500) is greater than the actual cash value of the vehicle ($7,000), the car would be written off in Utah or Vermont.

Who decides whether my car will be repaired or written off?

Each state sets in own laws determining when a car is considered totaled. For example, some states will require a car to be written off when the cost of repairing the car is more than 75% of the value of the car. Other states have higher or lower thresholds, and some may use a total loss formula.

In some states, insurers may be given the final say in whether or not a car is totaled, provided that they abide by all laws.

When a car is written off, what happens to it?

The car will be retitled as a salvage vehicle and in most cases will be sold to a salvage yard for parts and scrap metal. In some cases, your insurer will offer to give you the vehicle back, but the salvage value will be deducted from your insurance check.

How salvage titles work

In most states, it’s not legal to drive a car with a salvage title. Once you’ve repaired the car and it’s safe to drive, you may be able to get a rebuilt or revived salvage title so that it’s street legal, but it will likely be difficult and expensive to get it insured. Once a vehicle has been totaled, it’s value is significantly decreased — even if you’re able to fully repair it.

What to do if your car is written off

If your car is declared a write-off by your insurer, you, of course, have the option to accept their decision. However, keep in mind that the insurance payout you receive to help replace your car may be less than you had hoped.

Insurers calculate your payout by subtracting your deductible from your car’s market value, which factors in:

  • Its listed value
  • Current sale prices of cars with the same make/model/year
  • The pre-accident condition of your vehicle
  • Its mileage

What if I want to keep my car?

If you’re unhappy about your car being written off, you have two options:

  • Keep the car, use the insurance money to repair it and get a rebuilt or revived salvage title.
  • Challenge the insurer’s decision.

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Can I challenge a write-off?

If the insurer decides that your vehicle is uneconomical to repair and declares it a write-off, you may disagree with the cost quoted to repair your vehicle or your car’s salvage value. If this happens, you can dispute their assessment to get your car repaired.

Gather together the following before talking with your insurance company:

  • Quotes from repair shops outlining how much it will cost to repair the vehicle.
  • Quotes from salvage yards that reflect the salvage value of your vehicle.
  • Evidence of the market value of your vehicle from a company such as Kelley Blue Book.

If you provide this information to your insurer straight away and ask them not to report your vehicle to the NMVTIS registry, it may be possible to get the assessment changed.

Can I challenge how much they’re willing to give me for my car?

Yes, if you’re more concerned about the size of the check than getting your old car back, the process will be similar. Gather quotes showing the market and salvage values of your vehicle and discuss them with your insurer.

What can I do if my insurer still won’t fix my car?

If you’re unhappy with the way you’re treated by your insurer, you can complain through its internal dispute resolution service or to the National Association of Insurance Commissioners (NAIC) if necessary.

Selling a car that’s been written off

While it is legal to sell a car that’s been totaled, its rebuilt or revived salvage title will significantly lower its resale value.

The National Motor Vehicle Title Information System (NMVTIS) keeps track of vehicle titles, so any potential buyer or insurer will be able to see that it was once totaled, even if it’s sold in a different state.

What happens if a financed car is written off?

In some cases, there may be a gap between the amount paid out by your insurer and the amount you still owe on your car, which is where gap insurance can help. This is designed to pay the lender the outstanding loan amount when your comprehensive car insurer’s total loss payout is insufficient to pay out your loan contract.

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Bottom line

If your car is considered a total loss by your insurance company, it’s not the end of the world. You have options to prevent a total write-off, challenge the decision or report your insurer.

If you’re not happy with the result of your accident claim, compare other providers to find one who will take care of you and your vehicle better the next time you need to make a claim.

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