losses incurred as a result of traffic accidents. An insurance company may declare a vehicle totally destroyed ('totaled' or 'a write-off') if it appears replacement would be cheaper than repair.

Insurance can cover some or all of the following items:

1. The insured party
2. The insured vehicle
3. Third parties

Different policies specify the circumstances under which each item is covered. For example, a vehicle can be insured against theft, fire damage, or accident damage independently.