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It was bad enough that you were in a collision. Your beloved car is waiting for repairs.  Th...

It was bad enough that you were in a collision. Your beloved car is waiting for repairs.  The insurance adjuster has come and gone.  Now you receive the report:  your car is a write-off.

What it means:

Your insurance company estimates that it is not worth repairing your car. Several factors are in play:

•    Your car’s Actual Cash Value (ACV) is the replacement cost, minus depreciation.

•    The estimated cost of repairs.

•    Your insurance company has a magic percentage, probably between 51% and 90%.

Multiply the ACV by the magic percentage for the cut-off amount.  If the estimated cost of repairs is higher than that cut-off amount, then your car is a write-off.

In other words: if it will cost more than about one-half to nine-tenths of your car’s value to replace the car: then you should replace the car.

Your insurance company’s plan:

Your insurance company will offer you compensation to the tune of the Actual Cash Value.  In return for this settlement, they take possession of your car, and then sell it for parts or scrap.

You will take the money and shop for cars.  If you find the same make/model/year, then hopefully the settlement will cover the sales price.

Your insurance company hopes that you will buy a new policy from them.

Your choices:

You can accept the offer; negotiate a higher settlement; or keep your car and pay for (or do!) the repairs yourself.

Whether you accept right away or negotiate and accept a higher settlement, do remember to obtain permission to retrieve personal belongings from your car before it disappears.  Your first aid kit, CD collection, sunglasses and road maps are yours – but they won’t be returned by the Car Fairy.

If you love your car so much that you want to repair it anyway, be ready for two surprising “costs”.  Your insurance company will pay you the offered compensation, minus the car’s scrap value and minus your deductible.  The scrap value would have reduced your insurance company’s net loss.  You pay your deductible in case of covered repairs, but the company waives (omits) the deductible in the case of a write-off.

A final word of warning: Respond very quickly to your insurance company when you receive the report, even if it is just to say you are thinking about repairing your car. There might be a clause that allows your insurance company to assume that you will accept a settlement, and therefore take your vehicle before you can get your belongings or make the decision to repair it.  Once your car is moved (to an auction yard or scrap yard), it is much more difficult to find it and retrieve it.  And it’s really hard to un-crush a car.

By the way, you should tell your mechanic to wait for the insurance appraisal before starting repairs.  If your mechanic starts fixing your car, and then it is treated as a write-off…your settlement will not have any additional money to pay for the partial repairs.  Your mechanic, of course, will deserve to be paid.  A mechanic’s lien could prevent the insurance company from selling your car for the scrap price.  Obviously, you want to avoid this messy situation.  Clearly inform your mechanic to wait for your approval before starting repairs, and that you are waiting for the insurance appraisal.

If you’re in the market for car insurance:

There is only one way to know what your lowest rate could be:  compare car insurance quotes.  You can obtain car insurance quotes through CarInsuranceQuoter.com for free and with no obligation.