Why Salvage Is Important

Here's an example of why the salvage value is important to our decision.

Let's say it will cost $3,500 to fix the damage to a car worth $4,000 before the collision. On the surface, it might seem less costly to fix than to write off. After all, fixing the vehicle costs $500 less than paying out its value.

But let's say we'd get back about $1,200 salvage if we wrote it off and auctioned it.

Now, writing off this car becomes the least costly option. Writing it off costs the public insurance fund $4,000 minus the $1,200 we'll get back for salvage total $2,800. On the other hand, fixing it will cost $3,500.

It's not always true that write-offs are bad vehicles or they can't be fixed. Write-offs sometimes have damage that only affects how they look not how safe or reliable they are.

Take a car damaged by hail, for instance. It may have dents all over it that will cost more to fix than the car is worth. If you were to try to sell it with the hail damage, you'd likely get less for it than if it didn't have the damage.

But the hail only affects the car's appearance. If the car was mechanically and structurally sound before the hail, it likely remains so afterwards. So, it could still be quite reliable and safe to drive.