Claims how-to
What happens when your car is written off
By Sipho Dlamini · 7 min read · Updated 24 June 2026
- Total loss means
- Repair cost is uneconomical, or car is stolen or unroadworthy
- Retail value
- Roughly what a dealer would sell it for
- Market value
- Roughly the average of retail and trade
- Agreed value
- A fixed amount set when you took the policy
A car is written off (declared a total loss) when the cost to repair it, plus salvage, is uneconomical compared with its insured value, or when it is unroadworthy or stolen and not recovered. The insurer then pays you a settlement based on how your car was insured: retail, market or agreed value, less your excess and any amount still owed on finance.
A write off is stressful, especially if you still owe money on the car. Knowing how the settlement is calculated helps you check the offer is fair.
This guide explains how total loss is decided, the value types, and what happens with finance.
When is a car written off?
Insurers usually write a car off when the repair cost reaches a high proportion of the car's value, often when repairs plus salvage exceed roughly 60 to 70 percent of the insured value, though the exact threshold varies by insurer. A car can also be written off if it is structurally unsafe to repair, or if it is stolen or hijacked and not recovered.
Retail, market and agreed value
How you insured the car decides your payout:
- Retail value: roughly what a dealer would charge to sell the same car. Highest payout, usually highest premium.
- Market value: roughly the average of retail and trade value. A middle option.
- Trade value: roughly what a dealer would pay for it. Lowest payout.
- Agreed value: a fixed sum set when you took the policy, common for classics or modified cars.
Check your schedule to see which one applies to you.
How the settlement is calculated
The settlement is the insured value of your car at the time of the loss, minus your excess and any outstanding finance the insurer settles on your behalf. Add ons like sound systems or accessories are only included if specifically insured. The insurer keeps the wreck (salvage) once it pays you out, unless you buy it back.
If you still owe money on the car
If the car is financed, the settlement first goes to the bank to clear what you owe. If the payout is less than the outstanding balance, you could be left with a shortfall to pay. This is where credit shortfall (top up) cover helps, as it covers the gap between the insured value and the finance balance.
Disputing a write off value
If you think the offer is too low, ask the insurer in writing how they calculated it and which value guide they used. You can provide evidence of comparable cars for sale and any extras you insured. If you cannot reach agreement, you may escalate to the Ombudsman for Short Term Insurance (OSTI) at no cost.
After the settlement
Once you accept and are paid out, the insurer takes ownership of the salvage and the policy on that car ends. Cancel your licence and arrange new cover before you buy a replacement. If you keep or buy back the salvage, it must be re registered and may be flagged as a previously written off vehicle.
Frequently asked questions
What does it mean when a car is written off?
It means the insurer has declared the car a total loss because repairs are uneconomical, the car is unsafe to repair, or it was stolen and not recovered. Instead of repairing it, the insurer pays you a settlement.
How is a write off value calculated?
It is based on your car's insured value (retail, market or agreed) at the time of the loss, minus your excess and any outstanding finance the insurer settles. Extras count only if specifically insured.
What is the difference between retail and market value?
Retail value is roughly what a dealer would sell the car for, the higher figure. Market value is roughly the average of retail and trade value, a middle figure. Retail cover usually costs a bit more.
What if my payout is less than my car loan?
You may face a shortfall to pay the bank. Credit shortfall (top up) cover is designed to cover the gap between the insured value and the outstanding finance balance.
Can I keep my written off car?
Sometimes you can buy back the salvage from the insurer, but the car must be re registered, may need rebuilding, and is flagged as previously written off. The settlement is reduced by the salvage value if you keep it.
Can I dispute the write off amount?
Yes. Ask in writing how it was calculated, provide evidence of comparable cars, and if you cannot agree, lodge a free complaint with the Ombudsman for Short Term Insurance (OSTI).
How long does a write off settlement take?
It varies by insurer and how clean the claim is, but total loss settlements often take a few weeks once assessment, finance confirmation and documents are complete. Outstanding paperwork is the usual delay.
