[LTDHO]

Originally Posted by magoo66

You're points are correct, but there is another type of write off. I used to work in the insurance industry, and like most businesses, it's all about minimising costs. Probably the most common type of write off is when the value of the wreck exceeds the value of the repairs. Once a car is written off, ownership of the wreck is transferred to the insurance company, essentially by paying you out, they have just bought your car.

For example, you may have a car worth $10,000.00 and have accident damage worth $1,000.00. You would probably assume that the insurer will repair the car and in most cases this would be correct, but the missing piece of the puzzle is the value of the wreck.

Lets say the value of the wreck is $6,000.00, the insurance company will fix your car and it just cost them $1,000.00. But if the value of the wreck was $9,500.00, your car just became a write off. The insurance company pays you $10,000.00, sells the wreck for $9,500.00 and it's only cost them $500.00.

Magoo you are very close but not entirely right.

The comparison is repair cost Vs (Market value less salvage)

For example.

MV is $10,000
Salvage is $1500
Repair cost is $7000
Then the vehicle(as long as the integrity has not been compromised) will be repaired.
However if the repairs were $9000, then the car is un-economic to repair.

Naturally this works with heavy hit vehicle and not minor hits where that salvage is closer to the MV.