When your insured car has been involved in an accident your insurance company will send out an insurance assessor, also referred to as an adjuster, to calculate the damage in monetary terms. The insurer needs to make a decision as to whether the car will be repaired or written off.

If the cost of repairing the car is more than its market value, the insurer will decide to write off the car. The market value the insurance company will use is calculated at what your car was worth before the accident. Property so badly damaged that it is not worth repairing is acknowledged by the insurance company as a total loss and written off.

You will be paid out the fair market value of the car to replace your loss. A point to remember is that if you still owe any money on the car, the insurance company will first settle the outstanding loan with the bank. A situation could arise where the outstanding loan exceeds the insurance payout; you will be personally liable for the shortfall. Specific insurance can be obtained to protect you against a situation such as this.

Once the insurance company has settled your claim the damaged car, called salvage, becomes the property of the insurer and they will sell it, if possible, to offset their costs.