My Vehicle Has Been Written Off – What Happens Next?
Being told your vehicle has been written off can come as a real shock, especially if it’s your first insurance claim.
For many people, it’s a confusing time. One minute you’re expecting your vehicle to be repaired, and the next you’re being told it’s a total loss. Naturally, questions start racing through your mind.
What does “written off” actually mean? Why can’t it just be repaired? How much is my insurer going to pay me? How do they work out what my vehicle is worth? What happens if I don’t agree with the settlement?
These are all questions we’ve been asked countless times throughout our careers working in the insurance industry. With more than two decades of experience in motor claims, auditing and vehicle valuations, we know that understanding the process can make a stressful situation much easier to navigate.
This guide explains what happens when your insurer declares your vehicle a total loss in New Zealand, how the settlement process works, and what you can do if you have questions along the way.
What does it mean when a vehicle is written off?
A written-off vehicle (also known as a total loss) is one that your insurer has decided is not economical to repair. This decision is based on the estimated cost of repairing the vehicle compared with its insured value under your policy.
This doesn’t necessarily mean the vehicle can’t be repaired. In many cases, the damage is repairable. However, if the estimated repair costs reach a point where repairing the vehicle is no longer considered economical, your insurer may declare it a total loss.
The insured value used to make this decision depends on the type of insurance policy you have.
- Agreed Value — The value agreed between you and your insurer when your policy was taken out or renewed. This amount is shown on your policy schedule.
- Market Value — The current market value of your vehicle immediately before the accident.
While every insurer has its own internal assessment process, vehicles are commonly declared a total loss when the estimated repair costs reach a high proportion of the vehicle’s insured value. At that point, repairing the vehicle is no longer considered economically viable.
Step 1: Your insurer assesses the damage
After your claim has been lodged, your insurer will arrange for your vehicle to be assessed, usually by an assessor or an approved repairer. During the assessment they’ll determine the extent of the damage, whether it’s repairable, the estimated cost of repairs, and whether there’s likely to be any hidden damage. Once this information has been gathered, your insurer can decide whether repairing the vehicle is economically viable or whether it should be declared a total loss.
Step 2: Your insurer decides whether to repair or declare the vehicle a total loss
Once the repair estimate has been completed, your insurer will decide whether the vehicle should be repaired or declared a total loss. In New Zealand, this decision is generally based on whether the cost of repairs is considered economical when compared with the vehicle’s insured value. If repairing the vehicle is no longer considered economically viable, your insurer will usually settle the claim as a total loss instead of authorising repairs.
Step 3: How your settlement is calculated
The amount you’re paid depends on the type of cover you have.
Agreed Value
If your policy provides Agreed Value cover, you and your insurer have already agreed on the value of your vehicle. This amount is shown on your policy schedule. If your vehicle is declared a total loss, you’ll generally receive the agreed value shown on your policy schedule, subject to the terms and conditions of your policy. This may include deductions such as your excess, any unpaid premiums or any other applicable adjustments.
Market Value
If your policy provides Market Value cover, your insurer must determine what your vehicle was worth immediately before the accident. To do this, they’ll obtain a pre-accident valuation, which assesses what your vehicle would reasonably have sold for immediately before the loss. This assessment considers a range of factors, including make and model, year of manufacture, kilometres travelled, overall condition, factory options, service history, and comparable vehicles available in the New Zealand market.
The settlement amount is then based on that assessed market value, together with the terms and conditions of your policy. If you don’t understand the settlement amount, ask your insurer to explain how the valuation was reached and what market evidence was considered.
Step 4: Reviewing your settlement offer
Once your insurer has completed its valuation, you’ll receive a settlement offer outlining how your claim has been calculated. Before accepting, it’s worth taking a few minutes to check:
- The settlement amount and any deductions, such as your excess or unpaid premiums
- Whether the valuation evidence matches your vehicle’s actual condition, kilometres travelled, and features
- Whether you have any additional information, such as service records, recent work, or verified modifications, you’d like your insurer to consider
Understanding your settlement before accepting it can help avoid confusion later and gives you the opportunity to raise any concerns before the claim is finalised.
Can I choose to repair my vehicle instead?
If your insurer has declared your vehicle a total loss, you may still be able to repair it yourself; but this isn’t always possible.
If keeping your vehicle is important to you, it’s worth having a conversation with your insurer before your claim is finalised. In some cases, your insurer may agree to settle your claim by paying you the value of your vehicle less the salvage (wreck) value, allowing you to retain ownership of the damaged vehicle and arrange the repairs yourself.
It’s best to raise this with your insurer as early as possible. Once your claim has been settled and ownership of the vehicle has transferred to the insurer, it may no longer be possible to retain it. Having the conversation early gives you the best opportunity to understand your options.
What if my vehicle has structural damage?
If your vehicle has sustained structural damage, there will be additional requirements to satisfy before it can legally return to the road.
In New Zealand, insurers are required to notify the New Zealand Transport Agency (NZTA) when vehicles are declared a total loss due to structural damage. If the vehicle is subsequently repaired, it will need to undergo the appropriate inspection and re-certification process before it can be re-registered and legally driven on New Zealand roads.
The exact requirements will depend on the type and extent of the damage, so it’s important to understand what’s involved before deciding to retain and repair a written-off vehicle.
What’s next?
Once you’re satisfied with the settlement, your insurer will arrange payment and advise you of the next steps.
If you’ve accepted a cash settlement and ownership of the vehicle transfers to the insurer, they’ll arrange collection of the vehicle and manage the salvage process. If you’ve retained the salvage, you’ll be responsible for arranging any repairs and meeting any certification requirements, where applicable, before the vehicle can legally return to the road.
If, after discussing the valuation with your insurer, you still have concerns about whether it reflects your vehicle’s true pre-accident value, obtaining an independent pre-accident valuation can provide an objective assessment and help you make an informed decision.
Frequently Asked Questions
Do I have to accept my insurer’s settlement offer?
If you have Market Value cover and don’t agree that the offer reflects your vehicle’s true value, you can raise this with your insurer and provide supporting evidence, such as an independent pre-accident valuation, before deciding whether to accept. If you have Agreed Value cover, the settlement amount is fixed at the value agreed when the policy was taken out or renewed, so there is no scope to dispute the figure itself, though you can still query how any deductions were applied.
Can I get my own valuation instead of relying on my insurer’s figure?
If you have Market Value cover, you’re entitled to obtain an independent pre-accident valuation as evidence if you believe your insurer’s figure doesn’t reflect your vehicle’s true market value. This is a separate, independent assessment that considers comparable vehicles currently available in the New Zealand market. This doesn’t apply under Agreed Value cover, as the settlement amount was fixed when your policy was taken out or renewed.
Can I negotiate the settlement amount?
Under Market Value cover, you can present supporting evidence, such as service records, verified modifications, or an independent valuation, if you believe the offer does not reflect your vehicle’s true value, and request that your insurer reconsider the settlement. Under Agreed Value cover, the settlement amount is fixed at the value agreed when the policy was taken out or renewed, so there is no scope to negotiate this figure.
What happens if I still owe money on the vehicle?
If your vehicle is under finance, your insurer will usually pay your finance provider directly from the settlement, with any remaining balance paid to you. If the settlement is less than what you owe, you may need to cover the shortfall, so it’s worth checking with your finance provider early in the process.
How long does the total loss process usually take?
Timeframes vary by insurer and the complexity of the claim. Where a claim has been accepted and no further information is outstanding, most straightforward total loss claims are settled within a couple of days of the vehicle being assessed. Your insurer will be able to provide a specific timeframe once your claim has been lodged.
Can I keep my personalised plates?
Yes, but you’ll need to arrange this with your insurer before the vehicle is disposed of. Once the vehicle has been collected or the salvage process has begun, it may be too late to retrieve them, so it’s worth raising this early in your claim.
Will I receive a courtesy vehicle?
This depends on your policy. Some policies include a courtesy vehicle for a limited period while your vehicle is off the road and unable to be driven, others don’t. It’s worth checking your policy schedule or asking your insurer directly what cover you have.
Will a written-off claim affect my future insurance premiums?
Making a claim, including a total loss claim, can affect your premiums or claims history depending on your insurer and the circumstances of the loss. It’s worth asking your insurer directly how this specific claim may affect your policy going forward.