Which Offers Higher Compensation: Total Loss or Scrapping of an Accident Vehicle?
2 Answers
Relatively speaking, total loss offers higher compensation. When the insured object is damaged but not completely destroyed, it can be repaired or recovered. However, the cost incurred would exceed the value of the salvaged object, making it not worthwhile. In such cases, the insurance company abandons further efforts and provides the insured with full compensation of the insured amount, which is referred to as a constructive total loss. Total loss vehicle: The repair costs exceed the vehicle's current actual value, but the vehicle still retains some value. Therefore, repair shops can purchase the vehicle, repair it themselves, and then resell it as a used car. Scrapped vehicle: According to Chinese laws and regulations, vehicles that have reached their scrapping age must be scrapped, meaning they are legally prohibited from being driven on the road.
As someone who deals with auto insurance all day, let me talk about this. When handling a totaled vehicle, a total loss usually pays out more because it means the insurance company deems the vehicle not worth repairing and compensates you based on its market value, equivalent to selling the whole car. For example, a car worth 100,000 might get you 70,000 to 80,000 in compensation. On the other hand, scrapping just treats the car as waste, and a recycling plant might only give you a few hundred bucks, at most one or two thousand—completely incomparable. The reason is simple: scrapping only considers the price of scrap steel and the value of residual parts. Of course, the exact amount depends on the vehicle's age, brand, and extent of damage. If the car isn’t too old, don’t rush to scrap it—get a full insurance assessment first and aim for a total loss settlement. In short, in terms of payout, a total loss is definitely the better option. Don’t let recyclers fool you.
