Exclusive: Why crashed cars are increasingly totaled
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Crashing a car is like crashing a computer these days — and the result is a higher share of vehicles being totaled.
Why it matters: When cars, pickups and SUVs are deemed a total loss, it leads to higher replacement costs and higher insurance premiums for everyone else.
Between the lines: The share of vehicles deemed totaled in collisions hit an all-time high of 27% in 2023, according to LexisNexis Risk Solutions data compiled for Axios.
- That's up from 19% in 2018.
The big picture: Vehicles are stuffed with electronics these days — and even if they don't need to be replaced or repaired after a crash, the electronics need to be addressed.
- Advanced driver assistance systems — such as lane-departure warning and rear-cross alerts — "have to be recalibrated with any accident," says Chris Rice, VP of strategic business intelligence for LexisNexis Risk Solutions.
Zoom in: Pandemic-era trends also accelerated the percentage of vehicles that are declared a total loss, for multiple reasons.
- The cost of replacement parts spiked.
- The amount of time needed to get repairs increased, which also increased the amount of time that insurers had to provide loaners to car owners.
- The cost of loaners soared as car prices skyrocketed, when the chips shortage created production delays.
- It's "almost a perfect storm," says Frank Cesario, senior director for claims at LexisNexis Risk Solutions.
The upshot is that insurers often decide that they'd rather fund a replacement than go through the process of repairing a vehicle that's been damaged.
- The average annual cost of full auto coverage increased 15% nationwide in 2024, per data from Insurify reported by Axios' Alex Fitzpatrick.
- Rates are likely to increase 5% nationwide this year, Insurify predicts.
The bottom line: If you're in an accident, don't be surprised if your vehicle doesn't make it.
