Is your car written off? Understanding total loss payouts

Have you been in a car accident that left your car so badly damaged that it was called a write-off? If fixing your car costs more than its insured value, your insurance company could declare a total loss and pay you the value of the car instead of covering repairs.

Having a car written off is a stressful experience, but you can make the payout process go more smoothly when you know how the write-off process works, as well as tips that can save you frustration and money. Let’s explore this in more detail.

What does a car write-off mean?

A write-off, also known as a total loss, is when your insurance provider determines that it’s not practical or cost-effective to repair your car. This doesn’t always mean the car is completely wrecked – it simply means the insurer won’t pay to fix it under your policy.

After an accident, an assessor will inspect every dent and scratch, add up the cost of parts, work, towing, storage and admin fees, and compare that total to your car’s pre-accident value on your policy.

If the repair estimate is higher than your car’s insured value after your excess is taken off, your insurer may choose to declare a write-off and pay you for the insured amount of your car.

How South African insurers declare a write-off

There are two main scenarios where a car may be written off. Let’s take a look at these.

1. The cost of repairs is more than your coverage

Insurers in South Africa typically use a repair-to-value ratio to decide whether to repair your car. If the repair costs are more than 60% to 70% of the car’s insured or market value, they’ll usually declare it a write-off. This ratio may be different for every insurer, but the principle remains the same.

If repairs cost more than what the car is worth, it’s uneconomical to fix.

The car is too unsafe to repair

Even if repairs are technically affordable, a car can still be written off if it has:

• A lot of structural damage, such as a bent chassis or crushed crumple zones.
• Airbag or suspension damage that makes driving unsafe.
• Water or fire damage affecting electronics or structural integrity.

In any of these cases, your insurer may decide that the car cannot be restored to a roadworthy condition or that doing so would risk safety.

How insurers calculate your payout

After your car’s written off, the insurer will calculate your payout amount based on the car’s value just before the accident. Depending on your policy, your car may be insured for either trade, market, or retail value.

Market value reflects what a private buyer would likely pay for your car in its pre-accident condition, while retail value is based on the typical price of a similar, dealership-ready car.

Your insurer may choose to pay out according to the option you selected, minus your excess. For example, if your payout is R150 000 but you still owe R170 000 on your car loan, you could be required to cover the R20 000 difference yourself.

Avoiding a shortfall with gap cover

Think of gap cover as a safety net that fills the gap between what you owe and what your insurer pays when your car is written off.

Gap cover can be a lifesaver if you’re financing your car through a bank or finance house, or if you’d rather avoid any out-of-pocket costs after a write-off. When you sign up for insurance, it’s a good idea to check whether gap cover is included or easy to add.

Step-by-step guide to claiming your total loss payout

Follow these five steps to submit a total-loss claim with less drama and faster cash in hand.

1. Be a scene detective

Write down your name, ID, phone, email, the make, model and licence plate numbers, VIN, and mileage of your car. Take clear photos of every dent and scratch, and note the date, time, and location of the accident. If another driver is involved, get their name, car registration number, and contact details.

2. Call the police

Call the police for a case number if there are injuries or third-party damage. If you’re insured with Prime South Africa, lodge your claim online, by email, or by calling 011 745 7800 with all your details and the information you have.

3. Let them assess your car

An assessor will check your car for all damages and add up the cost of parts that need repairs or replacement, as well as the cost of labour, towing, and storage. They will then compare this total to your policy’s level of insurance cover.

4. Check your offer

Your insurer could give you a settlement offer based on the market or retail value minus your excess. If this happens, request a full breakdown, and if something doesn’t look right, ask for a second valuation.

5. Choose your next move

If your car is scrapped, you may get your full payout. In some cases, you might be able to keep the wreck with a logbook note. Just remember that, depending on your insurer, your next premium may increase after you make a claim.

Lock in future cover

Once the payout lands in your account, it’s time to get a new car. You can use your payout cheque toward a similar model, and then lock in protection with one of Prime South Africa’s insurance plans, which can be customised to meet your driving needs and budget.

Make sure you know about all the different types of car insurance plans available. For example, comprehensive car insurance covers everything from when your car is damaged, written off, or stolen. You can even get a quick online car insurance quote.

Get car insurance for when you need it most

Having your car written off can feel like an unexpected setback, but once you know how payouts work and how to avoid a credit shortfall, you’re back in control. Choose a car insurance policy that explains write-off and accident cover terms clearly.

Disclaimer:

This article provides general information about car write-offs and how total loss payouts work. Please note that this information may vary among different insurance providers.

Always conduct your own research and consult a certified financial advisor to select the best insurance policy for your needs.

Get a quote for affordable comprehensive cover from Prime South Africa and enjoy fixed premiums*, reducing excess*, and top-tier service. T&Cs apply.