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What happens when your car is written off?

How a written-off (total loss) car insurance claim works in Australia — how insurers decide a car is a total loss, what your payout is based on, how finance and GST are handled, and what a write-off means for registration.

A written-off car — the insurer's term is a total loss — is one that costs more to repair than it is worth to fix. Instead of repairing it, the insurer pays you out. Understanding how that payout is calculated, and how finance is handled, can be the difference between walking away whole and being left with a debt on a car you no longer own.

How a total loss is decided

After an accident, theft or major damage, the insurer assesses the repair cost. If repairing the car safely — plus towing, storage and related costs — exceeds its insured value (or a set percentage of it), the car is declared a total loss. Severe damage, flood damage and stolen cars that are not recovered all commonly end in a write-off.

What your payout is based on

This comes straight back to the choice you made when you set up the policy:

  • Agreed value — you receive the fixed figure agreed when you took out or renewed the policy, less your excess and any deductions in the PDS.
  • Market value — you receive what the car was worth at the time of the loss, assessed by the insurer using its age, condition, kilometres and comparable sales.

From the payout, the insurer typically deducts your excess and any unpaid premium. GST treatment depends on whether you are registered for GST.

The market-value trap: if the insurer's valuation comes in lower than you expected — and lower than what you still owe on finance — you can be left with a shortfall. This is why agreed value, or separate gap cover, matters on a financed car.

If you still owe money on the car

Where a car is financed, the payout usually goes to the financier first to clear the loan. If the payout is less than the amount owing, you are left covering the difference yourself — unless you hold gap (shortfall) cover, which is designed to bridge exactly that gap. Check whether you have it before you assume a write-off clears your debt.

Repairable vs statutory write-offs

Write-offs are generally classed as either:

  • Repairable write-off — too expensive for the insurer to repair, but potentially able to be repaired and, depending on state rules, re-registered after inspection.
  • Statutory write-off — damaged to the point it cannot be safely repaired for road use and generally cannot be re-registered.

A written-off vehicle is recorded on the written-off vehicle register. Rules on keeping and re-registering a write-off vary by state and territory, so confirm with your insurer and the relevant road authority.

What to have ready

  • Your policy schedule showing agreed or market value and excess
  • Any finance contract and payout figure from the financier
  • Whether you hold gap / shortfall cover
  • Photos and details of the incident for the claim
Insuro stores your car policy schedule, agreed value and finance details in one vault, so if the worst happens you know exactly what you are covered for. Forward your insurer emails to your private@insuro.com.auaddress. Free during beta.

Frequently asked questions

How do insurers decide a car is written off?⌄

A car is declared a total loss (written off) when the cost to repair it safely, plus related costs, exceeds its insured value or a set percentage of it. At that point the insurer pays you out rather than repairing the vehicle.

How much do you get for a written-off car?⌄

It depends on your policy. If you insured for agreed value, you receive that fixed figure (less excess and any deductions). If you insured for market value, you receive what the car was worth at the time of the loss, as assessed by the insurer.

What happens if I still owe money on a written-off car?⌄

The payout goes towards clearing the finance first. If the payout is less than what you owe, you are left with the shortfall unless you have gap or shortfall cover. This is a key risk with market-value policies on financed cars.

Can I keep my car if it's written off?⌄

Sometimes, if it is classed as a repairable write-off, you may be able to keep it by accepting a reduced payout — but statutory write-offs generally cannot be re-registered. Rules vary by state, so check with your insurer and state authority.

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