Have you ever heard of a write-off in the world of vehicles and car insurance?
Write-offs are a phenomenon that occurs very frequently after an accident, but not everyone is familiar with this terminology or what example happens in this situation. When your insurance company writes your car off, they indicate that it is a loss and should not be repaired. Instead, they will pay out according to your policy.
That might sound simple to some, but others may still be confused. What is the actual process behind writing off a car? Today, learn what you need to know about the concept of a written-off car so that you are better prepared to face this potential situation.
What Exactly Is a Write-Off?
A write-off is a term used by car insurance companies to indicate that a car is a total loss. This means that the damage to the vehicle would cost more to repair than the actual value of the car.
When car insurance companies declare that a car is a write-off, they then offer the policyholder a settlement for the car’s value or whatever the settlement amount is according to your policy.
Why Do Car Insurance Companies Do “Write-Offs”?
Some people get upset when a car company determines that the best option is to consider the car a total loss, especially when it seems like the damage to their vehicle is not that severe.
However, it’s not as simple as just repairing the damages. When companies are determining what to do when an insurance claim comes in after an accident, they must weigh the value of the vehicle against the cost of the damages.
If the damages are going to be more expensive to repair than it would be to pay off the value of the car, insurance companies may decide to simply do a write-off settlement. This is particularly true when a car is older or has very high mileage.
How Does My Coverage Affect My Settlement?
To understand how writing off works, it’s essential to understand all types of physical damage coverage involved in car insurance. Physical damage coverage typically comes in two forms: comprehensive coverage and collision coverage. Collision coverage works on all collisions involving the vehicle while comprehensive coverage handles everything else.
Write-offs can happen in either situation, but it is more common to see this used under the collision coverage aspect of your policy plan.
Not all car insurance policies include the same details under these umbrella terms, so it is important to make sure that you have a detailed understanding of what is specifically stated in your insurance plan.
The amount offered in your settlement and the situations under which total losses will be considered depend somewhat on your coverage. Your policy may have a limited amount of coverage. If the damages exceed that coverage, for example, you may not be able to do anything except take the write-off settlement.
What Do I Do When Offered a Write-Off?
If your insurance company has determined that your car is a total loss, there are a few things that you can do to move forward.
#1: Accept the Offer
If you understand the insurance company’s decision and are happy with the settlement offer, you can accept this settlement and find a new car. This is often a good choice as it is the most straightforward.
#2: Challenge the Offer
If you feel that the insurance company did not properly evaluate the value of your vehicle, you can present evidence as to why you believe the amount should be different. This might include information about comparable vehicles and what they are currently going for in your area. Remember, however, that not all companies will change their offer, and what you can do next may depend on your policy terms.
#3: Pay to Keep the Car
If you want to repair or salvage the car yourself, you may be able to pay to keep the car in addition to the settlement. Some car insurance companies will allow you to pay them what they would have got for the recycled parts and keep the car.
However, keep in mind that damaged cars are marked as irreparable or salvage when declared a total loss. This may be limited on whether or not you can repair and drive the car in the future. In most cases, keeping a damaged car doesn’t make financial sense.
Photo by Laurel and Michael Evans on Unsplash
Insurance Is a Complicated Necessity
If you’re in a situation where you total your car with no insurance, you are going to have a lot of things to work out in the coming weeks. Your car being written off is just one of them. Even though choosing a policy and understanding how it works is complicated at times, not having car insurance coverage is likely to be even more complicated.
Don’t let your fear of confusing policy terms keep you from investing in insurance. Car insurance is an important type of risk protection. If you find your policy options confusing, work with an agent or specialist to better understand the specifics before you choose your terms. This will help you to feel more comfortable and confident in your choices.