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Why Writing Off Vehicles by Insurance Companies in South Africa at 50% or Even Less of Its Value is Not Good for Consumers. Insurance write-off threshold South Africa.


The practice of insurance companies writing off vehicles at 50% or even less of their value has become increasingly common in South Africa. While this approach might be economically viable for insurers, it often places consumers at a significant disadvantage. This blog delves into why this practice is problematic and offers guidance on navigating these challenges.

Discover why insurance write-offs at 50% or less of a vehicle's value are detrimental to South African consumers and learn how to navigate this issue effectively.

Understanding the Insurance write-off threshold South Africa.

In South Africa, many insurance companies consider a vehicle a write-off if the repair costs exceed a certain percentage of its market value. Traditionally, this threshold was around 70%, but it has been reduced to 50% or even lower by some insurers. This means that vehicles, which could still be economically repaired, are being declared total losses, forcing owners into difficult financial situations​​​ (Retail Motor Industry Organisation)​. Insurance write-off threshold South Africa.

Financial Implications for Consumers

Insufficient Payouts

When a car is written off, the insurance payout is typically based on the vehicle's pre-accident market value. However, this amount is often insufficient for consumers to purchase a comparable replacement vehicle, especially considering the added costs of finding a new car, increased premiums, and any excess payments​ (Retail Motor Industry Organisation)​​ (Retail Motor Industry Organisation)​.

Depreciation and Replacement Costs

Cars depreciate quickly, and the market value used by insurers often does not reflect the true cost of replacing the vehicle. Insurance valuations are based on trade guides and historical data, which may not accurately represent current market conditions. This discrepancy often leaves consumers with a payout that is lower than what is needed to replace their vehicle adequately​ (AutoForum)​​ (Retail Motor Industry Organisation)​.

Negative Economic Impact

Impact on Small and Medium Enterprises

The auto body repair industry, especially small and medium enterprises (SMEs), is significantly impacted by the stringent write-off policies. Repair shops often face financial strain due to reduced repair opportunities and the pressure to cut costs, which can lead to compromised repair quality and safety issues for consumers​ (Sambra)​​ (Retail Motor Industry Organisation)​.

Fueling the Underground Market

When vehicles are written off, they often end up at auctions and can be bought cheaply by criminal elements. These vehicles may be repaired substandardly using stolen parts and then sold to unsuspecting buyers, posing serious safety risks. This practice not only affects vehicle safety but also supports illegal activities such as theft and fraud​​​ (Retail Motor Industry Organisation)​.

Navigating the Write-Off Challenge

Getting a Second Opinion

If your vehicle is declared a write-off and you disagree with the assessment, consider getting an independent evaluation from a trusted mechanic or loss adjuster. This can provide you with additional evidence to challenge the insurer's decision and potentially negotiate a better outcome​ (Sambra)​.

Understanding Your Insurance Policy

It's crucial to thoroughly understand the details of your insurance policy before any incidents occur. Familiarize yourself with the write-off thresholds and how valuations are determined. Being well-informed can help you better prepare and negotiate if your vehicle is declared a total loss​ (Retail Motor Industry Organisation)​​ (Retail Motor Industry Organisation)​.

Considering GAP Insurance

Guaranteed Asset Protection (GAP) insurance can cover the difference between the insurance payout and the amount owed on your car loan or the cost to replace the vehicle. This type of insurance can be particularly beneficial for newer cars that depreciate quickly, ensuring you are not left with a financial shortfall​ (BoltOn Tech)​.

Seeking Legal and Ombudsman Support

If negotiations with your insurer fail, you can escalate the issue to the Ombudsman for Short-Term Insurance. This independent body helps resolve disputes between consumers and insurance companies fairly, providing an additional avenue for seeking justice and fair treatment​ (Sambra)​​ (Sambra)​.


The practice of writing off vehicles at 50% or less of their value by insurance companies in South Africa presents significant challenges for consumers. Understanding your rights, seeking second opinions, and exploring additional insurance options can help mitigate the financial impact. It is crucial for industry stakeholders to work towards more transparent and fair practices to protect consumers and ensure the sustainability of the auto body repair industry.

For more detailed insights and support, you can visit and Financial Ombudsman.

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