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Does car insurance cover a write-off?

What to expect when your car is totaled or gets damaged beyond repair after an accident

Updated

Fact checked

After your car is towed away after a major car accident, you might be wondering if you’ll ever get to drive it again. Your options for dealing with a totaled car and any payouts depend on your car insurer and your state laws.

What is a write-off?

A write-off happens when your insurance company pays you the value of your car, rather than paying for repairs after an accident. Your car may get written off if it sustains so much damage that it won’t drive safely or isn’t worth the cost of repairs. A write-off is also called a total loss.

How do insurance companies determine a write-off?

The criteria for write-offs can depend on the state you live in. Insurance companies may use several different formulas based on state guidelines to calculate whether a vehicle should get written off:

  • Total loss ratio considers how much repairs might cost as a percentage of your car’s actual cash value. It gets calculated as the cost for repairs divided by actual cash value. States may set limits on how high the ratio between repair costs and car value can be before the car is considered a write-off. That ration can fall anywhere between 50% and 100%.
  • Total loss formula considers your car’s repair costs and salvage value before declaring it a write-off. If the cost of repairs plus the salvage value totals more than the actual cash value, 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

When would my car be considered a write-off?

Each state sets its own laws determining when a car is considered totaled. For example, some states 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 they stick to all laws.

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: When a 2009 Nissan Altima is considered a write-off

Catherine drives a 2009 Nissan Altima worth about $7,000. If she gets in an accident that causes $5,000 in damage, the total loss ratio is 71%.

In states like Oklahoma or Minnesota, the 2009 Nissan Altima would be considered a write-off. But North Carolina or Texas insurers might repair the car because it doesn’t meet their state’s total loss ratio.

Kelly Blue Book mentions the salvage value of a car is about 50% of its original value, or $3,500 for Catherine’s Nissan Altima. Since the cost of repairs plus the salvage value totals more than the car’s value — $8,500 — the car would get written off in states using the total loss formula.

What are my options if my car gets written off?

If your car is declared a write-off by your insurer, you might choose to accept their decision or keep your car.

Accepting the write-off

If you accept your insurer’s decision to write off your car, you’ll need to sign the paperwork and receive your settlement check in person or by mail within a few days or weeks. However, the insurance payout may total less than the cost of buying a new car because it factors in depreciation.

Insurers calculate your payout using:

  • Your car’s listed value
  • Current sale prices of similar cars
  • The pre-accident condition of your car
  • Your car’s mileage

Keeping your car

If you don’t want to total your car, you have two options:

  • Keep the car, use the insurance money for repairs and get a rebuilt or salvage title.
  • Challenge the insurer’s decision.

What is a salvage title?

When an insurance company writes off your car as a total loss, the car gets retitled as a salvage vehicle. In most cases, the insurer will sell your car to a salvage yard for parts and scrap metal. Your insurer can offer to give you the vehicle back, but the salvage value will get deducted from your insurance check.

How do 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.

How do I get a rebuilt salvage title?

Every state outlines a different process for getting a rebuilt salvage title. The process might include these steps:

  1. A certified rebuilder repairs the car.
  2. You, the owner, fill out paperwork for the car’s registration, certified labor and parts and inspection request.
  3. You bring the paperwork along with photos of the damaged car and the salvage title to an approved inspection site. Your car may need to be towed there.
  4. You pay the inspection fee and pass the safety inspection.
  5. If approved, you may get notice by mail or at the inspection site.

How can I get insurance for a salvaged car?

If you manage to repair your car and get a rebuilt salvage title, you’ll need car insurance to drive legally. However, insurance companies may make you jump through a few hoops first. You can expect:

  • An inspection. If you find a company willing to insure your car, it might require an inspection from a mechanic to verify your car’s safety and structure. Your insurance company might want an appraisal of the car’s value.
  • Rebuilt salvage title and registration. Next, your insurer will probably need proof of your car’s legal, roadworthy status.
  • Liability only. Some insurance companies may only provide liability coverage. This avoids the risk of paying a claim for your car if it gets damaged in an accident.
  • Agreed value. If the insurer agrees to offer physical damage protection, it might negotiate a set maximum amount to pay if your car gets totaled again.

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How do I challenge a write-off?

If the insurer decides your vehicle is not worth repairing, you can disagree with the cost quoted to repair your vehicle or your car’s salvage value. Gather together the following before talking with your insurance company:

  • Quotes from repair shops outlining the cost of repairs
  • Quotes from salvage yards for your car’s salvage value
  • Your car’s market value of your vehicle from Kelley Blue Book or car dealerships selling the same model and year

If you provide this information to your insurance company before it reports your vehicle as a total loss, you could get the assessment changed.

Can I challenge the insurance settlement?

Yes, you can challenge or negotiate the settlement check. The process still involves gathering quotes to show your car’s market and salvage values and discussing them with your insurer.

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

If your insurer won’t repair your car and you disagree with its assessment, you can complain through the company’s internal dispute resolution service or to the National Association of Insurance Commissioners.

What happens if a financed car gets written off?

If you were financing your car, you may experience a gap between the amount settled with your insurer and the amount you owe on your car. This happens because your insurance settlement factors in depreciation. On the other hand, your loan amount includes your car’s value when you bought it plus the loan’s interest.

You may have to pay the difference out of pocket unless you bought gap insurance ahead of time. Gap insurance pays your lender the outstanding amount when your settlement check doesn’t cover the entire loan.

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Bottom line

If your insurance company writes your car off, you can prevent a total write-off, challenge the decision or negotiate your settlement check.

In the end, if you’re not happy with the result, compare other car insurance providers to find one with better claims service for the future.

Frequently asked questions about write-offs

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