When Do Insurance Companies Write Off Cars?

An insurance company will generally write off a car as a loss in cases of theft or extensive damage. The insurance company then offers a settlement amount to the policy holder.

Damage

Insurance companies generally declare a car "totaled" when the damage done to it equals or surpasses 75 to 80 percent of its retail value, according to financial advice resource Kiplinger. In some cases, they may add estimated repair costs to the vehicle's current salvage value to calculate a settlement amount.

Theft

Cars reported stolen and never found or returned can represent a total loss to the insurance company, which then settles with the policy holder, according to Pittsburgh news station KDKA's "Driving Today." In cases of insurance fraud, some owners will fake a theft and have the car destroyed so that even if someone recovers the vehicle it will still count as "totaled."

Considerations

Car owners who feel that their vehicle has more retail value than the insurance company's settlement offer covers can make a counteroffer, according to Kiplinger. Further options include arbitration with the insurance company, appeals to the state insurance commission or, if the situation warrants it, filing suit against the provider.

References

• Kiplinger: Collision Coverage: Don't Take Chances
• Driving Today: Auto Theft