Modern Australia is facing a new kind of problem, insurance write-offs in Australia are expected to rise in 2026. It is not because people are suddenly crashing cars as they have forgotten how to drive, but because repairing damaged cars is becoming a burden on the pocket. The reality is simple: the cost and complexity of repairing modern vehicles are exceeding the market value of cars than ever before. And when this happens it becomes obvious for the insurers to write-off the car altogether and declare it a total loss.

The shift is already happening across car removal services in Sydney and NSW, and industry reports show that this trend will continue. As more cars are written off, the amount of damaged cars that goes for scrapping and recycling will also increase, which would completely change how the ELV market operates. 

Why Insurance write-offs will increase in 2026 

The rise is driven by a perfect storm of economic and technological factors, which are expected to continue in 2026:

High Repair Cost

At the heart of the rising number of written off cars is repair costs. Modern cars are integrated with new technology like sensors, cameras and ADAS (Advanced Driver Assistance Systems) are standard.While these features can improve safety, they also increase repair costs.

Something as little as an impact on the bumper can require special labour, and brand specific parts. Repairs make up about 60% of insurance claim costs. You can understand that once the labour, diagnostics and part costs are added together, insurers realise that repairing the car no longer makes sense financially. It doesn’t need to take major damage, any small collision is more than enough to push a claim above the set threshold and it makes sense to scrap a car.

Parts Shortages & Delays

Supply chain issues are another major factor. Many car parts have become harder to source than they were a few years back, specially for newer models and imported vehicles. The lack of these parts (scarcity) makes the prices go up, and the wait time increases. 

These delays end up costing even more money to insurers. Since they still have to pay for storage fees and provide rental cars, all while the repairs are still pending. And in some cases these extra costs are the deciding factor that turn a simple repair into a write-off. For insurers, writing off a car early is way cheaper than waiting for its parts to arrive.

Increased Vehicle Value

The value of vehicles has increased since 2019, for both new and used cars. You would think that higher values would mean that write-offs have reduced but the opposite has happened.

While the scrap car market has risen, the value of specific older vehicles may still be low. When a car is damaged, the cost of repairing its high-tech parts cost more than the car’s market value itself. The gap between repair cost and vehicle worth keeps on widening. It is particularly true for old cars who are at the end of their insurance cycle.

Aging Fleet

The vehicle fleet of Australia is getting older. The average age of cars on the road is projected to reach around 13 years by 2026. You see older vehicles have low market value even if they run just fine.

When any car meets an accident, insurers are more likely to declare them uneconomical due to high repair costs. As a result, more damaged cars are being written off. These old cars, which would have been repaired completely and returned on the road in another time are now sent for scrapping. This aging trend alone guarantees a slow rise in write-off numbers.

EV (electric vehicle) repair complexity

EVs add another layer to the challenge as well. See, EV batteries are expensive, sensitive, and highly regulated. Even a small damage near a battery system can trigger safety concerns, and there are only a limited number of qualified technicians that can repair EVs in Australia.

And because of this skills shortage and the high cost of battery components, it becomes an easy decision for insurers to write-off an EV rather than have it repaired even if the incident is minor. As EV adoption in Australia increases, these write-offs will become more and more common, sending newer and newer cars for scrapping.

What it means for scrap car industry

The rising number of write-offs has several implications for the car scrapping industry:

Increased volume of ELVs

The industry will see a large volume of ELVs entering the systems. This would include not just old cars and wrecked cars, but newer cars that are technically repairable but have been written off because repair costs are too high and are labelled as “total loss” by insurers. And this would increase the need for efficient scrap processing and a compliant car removal industry will grow, particularly in urban areas like Sydney.

Recycled parts market

The high cost and scarcity of new parts is causing both the mechanic and the consumer to use second hand, recycled parts. It will create demand for both salvaged parts and support a more circular economy. Scrap yards and cash for cars service providers play a key role in feeding into this supply chain.

Recycling standards and new challenges

The increase in write-offs are pushing the industry to have a more standardised recycling process and laws. You see the growing number in ELVs is highlighting the need for a more nationally consistent approach to recycle vehicles in Australia. Industry organisations like FCAI and MTAA are focusing on product stewardship schemes that aim to improve material recovery, manage harmful components, and as a result reduce landfill waste.

Technological Challenges

The increase in the number of EV adoption is causing technological challenges that recycling facilities are not prepared for. You know, newer cars have more plastic and electric parts as compared to old traditional ones before. EV batteries especially need to be handled and processed carefully. Businesses offering car removal and recycling services that adapt to this change and get proper equipment, trained staff will be able to position themself better in the market.

Conclusion 

In short, insurance write-offs are not increasing because cars are getting worse. These numbers are increasing because cars are becoming more complex, repairs are expensive. By 2026, these write-offs are only expected to increase rather than ease. For insurers, it means that they can deem more claims as total loss. For drivers, it means that they have to pay higher premiums and get few repair approvals. And for the scrap car removal and recycling industry, it means managing Australia’s evolving vehicle lifecycle appropriately.