The term write-off is used to declare a car unfixable, which is ordinarily the case when a car is beyond repair. For an insurance company however, a write-off is where it costs more to fix the vehicle than repair it.

After an accident, your insurance company will send out an assessor to determine the damages of your car. This assessor (also known as an adjuster) calculates the damage of your vehicle in monetary terms. After this is determined your insurer will decide whether or not to write the car off.

If this cost of repair is greater than the market value of the car before the accident, then they will write it off. Under these circumstances, it’s not worth the insurer to pay out for repairs if it is cheaper to pay out for the whole cost of the vehicle.

This amount is a fair market value which will enable you to replace your car with one of the same value. If the car is still financed (which would mean you have comprehensive insurance), then the insurer will first settle the outstanding balance before paying you out. If the amount owed on the loan is greater than what the insurance is prepared to pay out, you will have to pay the rest. You can add a waiver or additional clauses to your insurance policy (which will increase your premiums) to avoid this.

The written-off vehicle then becomes the property of the insurance company who will then re-sell it to an salvage company to offset their own costs.