Insurance Companies Are Quickly Writing Off Vehicles Post-Accident | Carscoops

      Experts are describing what they call a perfect storm that has resulted in a 42% increased likelihood, compared to five years ago, of your new car being classified as a total loss following an accident.

      According to a recent study, 27% of vehicles involved in crashes are now considered total losses, marking a significant rise from 19% in 2018. This trend has shown consistent growth each year since then, indicating that it is unlikely to slow down.

      Insurance companies are swiftly declaring cars as total losses due to escalating repair and technology expenses. Today’s vehicles are increasingly intricate, not only due to features like in-car Wi-Fi but primarily because of ongoing advancements in safety technology. The downside is that these advancements are making repairs more complicated, and in some instances, rendering cars totaled even after minor collisions.

      As detailed in an Axios study utilizing data from LexisNexis Risk Solutions, several factors heighten the odds of a vehicle being labeled a total loss in the event of an accident.

      The increase in automotive technology correlates with the rise in write-offs. LexisNexis reports that 27% of cars in accidents are now deemed total losses, a notable increase from 19% five years ago.

      The pandemic further exacerbated the situation, as replacement parts became costlier and took longer to obtain. Additionally, the expenses for loaner vehicles surged, compounding the financial burden on insurance companies.

      Axios noted that today's car accidents are reminiscent of computer crashes, particularly as repairing a vehicle often entails addressing complex systems increasingly filled with advanced sensors. For example, while a minor collision on an older model may require minimal repairs, modern vehicles laden with technology present a different challenge.

      Even in minor accidents where advanced components remain intact but are simply misaligned, insurance companies must incur costs to recalibrate or replace those parts, negating the concept of an inexpensive fix that was common in the past.

      This situation ultimately leads to higher insurance premiums, with Axios reporting a 15% increase in full-coverage insurance rates in 2024 and anticipating another 5% rise this year.

      Clearly, vehicles today are more capable and safer than ever, yet the technological systems that enhance safety result in significantly higher costs for consumers in terms of insurance premiums. Therefore, investing in or leasing a new car with advanced technology comes at a notable financial expense.