After the accident, an insurance claims adjuster will inspect your vehicle and determine whether it can be repaired or whether it is labelled a "total loss". A vehicle is considered to be a total loss (or a write-off) when the cost of repairs is greater than the current value of the vehicle. It may also be considered a total loss if the necessary repairs can’t be carried out safely or economically.
If you’re in an at fault accident, and you have purchased Collision coverage, and your policy is in good order, your insurance company will pay for the cost of replacing the vehicle based on its current value, minus your deductible excess. If you’re not at fault you are covered under the Direct Compensation coverage of your policy.
How is the Settlement Amount Determined?
The current value of the vehicle is considered to be the amount that the vehicle could have reasonably been sold for prior to the claim. The value is determined by the retail selling price of a similar vehicle, while taking into account considerations such as mileage, condition of the vehicle, upgrades, prior damage and so on.
If your vehicle is considered a write off, your insurance company will calculate the vehicle’s cash value, including taxes and offer you a cash settlement for that amount. It is then your responsibility to buy a replacement car with the cash settlement.
The insurance company takes possession of your written-off vehicle, and brands it according to one of two classifications based on the extent of the damage:
Statutory Write-off. Vehicles in this category cannot be repaired and driven, they are useable for parts only. They will be placed on the Written-off Vehicle Register. For more information see https://www.tmr.qld.gov.au/Registration/Registering-vehicles/Written-off-vehicles/Written-off-vehicle-register.aspx
Repairable Write-off. This includes vehicles that can be repaired and must then be thoroughly inspected prior to being driven.
What if I want to keep my car?
If you want to keep your damaged vehicle after your claim has been settled, you can request that your insurance company allow you to keep it. In this case, your cash settlement will be reduced by the amount the insurance company would have recouped by salvaging the vehicle. Keep in mind that if your car has been branded as "Statutory Write-off", you can never repair and drive it, you will only be allowed to salvage it for parts.
"Repairable Write-off" vehicles must be repaired and pass a rigorous inspection before they can be legally driven. In the vast majority of cases, it simply doesn’t make financial sense to keep your damaged vehicle.
Hopefully, you will never be involved in a collision that involves the complete loss of your car, but in all cases, the best course of action is to communicate clearly with your insurance representative and make sure they are aware of all the facts in your case. If you have any questions, your insurance representative can answer them or find you the information you need.