Car Insurance, We often hear of cars being “written off” for insurance purposes following a collision or other calamitous incident. But what is the process? Who decides a vehicle is a “write-off”? And what does it mean for you as the person who insured the car?
What is a car insurance write-off?
A car may be written off because of severe structural damage that renders it unsafe to drive or when an insurer deems it too expensive to fix.
However, an insurer can also class a car as a write-off when far less damage has been done and the vehicle may be repaired sufficiently to be roadworthy again.
Here’s what happens when a car is written off, the circumstances in which it can happen, and what policyholders can expect.
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Why are cars written off?
A vehicle is considered a write-off if it has sustained damage the insurer considers uneconomical to fix, or if it is deemed beyond repair and unsafe to drive.
Insurers view cars as not worth fixing if the cost of the necessary repair work amounts to more than the car’s value. An insurer will base their assessment on a ‘repair-to-value’ ratio, which differs from firm to firm.
For example, a car could be worth £7,000 and its insurer may use a 60% repair-to-value ratio. This would mean the car would be treated as a write-off if the necessary repair work exceeded £4,200.
In addition to repair costs, other factors may be taken into account, such as the cost of a courtesy car while the repair work is taking place, should one be included in their driver’s insurance policy.
Will I receive a payout for a write-off?
If a car is unsafe to drive or too costly to repair, drivers with third-party fire and theft or comprehensive insurance will receive a payout of the current value of the car as what’s termed a ‘settlement fee’.
Drivers with guaranteed asset protection (GAP) insurance will also receive a payout to cover the difference between the car’s current value and the price they paid for it. GAP insurance is usually associated with new cars, which lose a significant proportion of their value once they are paid for and driven off the dealer’s forecourt.
What type of damage can lead to an insurance write-off?
One of the most obvious causes of damage is a major collision, but a car can also sustain significant damage from a fire, flood, or vandalism. A stolen vehicle found in a state beyond repair may also be written off.
Note, however, that a stolen car that is not recovered will not be declared a write-off. An insurer will pay out the cost of a replacement car, based on a valuation for the stolen vehicle.
How do I know my car is a write-off?
Only qualified insurer assessors can determine the status of a damaged car. They follow the industry-wide Salvage Code Of Practice to work out which vehicles should be permanently removed from the road and taken to a scrap yard, and which of them can be repaired.
The Code categorizes the various types of write-offs based on the severity of the damage done. The assessor records the car’s category in the Motor Insurance Anti-Fraud and Theft Register (MIAFTR) database, which is designed to help track and find stolen vehicles and detect fraud.
A car’s categorization demonstrates to a driver how serious the damage is and whether they can sell their car on. Someone buying a car also has a clear idea of its condition from its grouping and will know if it is officially considered roadworthy.
What are the different categories of write-offs?
On 1 October 2017, a trade body, the Association of British Insurers updated the categorisation of write-offs.
Previously, the four categories comprised a sliding scale: A, B, C, and D. These represented the extent of damage done to the vehicle and whether it was worth paying to repair it.
Since then, categories S and N have replaced C and D. They are meant to better demonstrate the issues that need fixing for the car to be made safe to use and roadworthy.
The current categories are:
A – Scrap: The vehicle is deemed unsuitable for repair, must not be driven again, and must be crushed at an authorized treatment facility
B – Break: The vehicle is deemed unsuitable for repair, and must not be driven again, but usable parts can be recycled in other vehicles
S – Repairable Structural: The vehicle has sustained damage to a part of the structural frame or chassis, which needs repairing before driving again.
These cars are identified as such on their V5C (vehicle registration certificate) logbook. It will include a statement that reads: “This vehicle has been salvaged due to structural damage but following a technical evaluation declared suitable for repair” so buyers can make an informed decision when considering whether to make a purchase.
N – Repairable Non-Structural: The vehicle has sustained no damage to the structural frame or chassis, but other parts such as steering or suspension components may require repairing to make the car safe to drive.
What happens after a car is written off?
While category A and B cars will be scrapped, a driver with a category N or S can accept the write-off value from the insurer and purchase a new car, or buy their car back if the damage is not too severe.
The insurance company becomes the legal owner of the car if it pays out for the write-off. It is the driver’s responsibility to inform the Driver and Vehicle Licencing Agency (DVLA) of this by completing the Notification of Sale slip that can be found on the vehicle’s registration document and returning it to the DVLA.
If you were to buy it back using the write-off payout, you would have to pay for repairs out of your pocket.
If an insurer does not sell the car back to the original owner it may sell it through a salvage company which will auction it off.
As soon as an insurer declares a car Category S, it must send a V23 form to the DVLA to update its status. This is not necessary if it is a category N car.
Can I buy a category S or N car?
Yes, buyers may choose a category S or N car because they can come at an attractive price. This allows buyers to then get the cars repaired at a lower cost, with cheaper labor and parts used than an insurer would require. This is legal and can prove cost-efficient for a buyer.
However, some fraudsters try to falsely sell category S and N cars as vehicles that have never been damaged, conning buyers into paying more than market value for them.
When buying a used car it can help to:
Ask the seller for the make, model, and registration number and ensure these match the details held by the DVLA on the gov. uk website
Ask the seller for the MOT test number and make sure it matches the car’s MOT status and history on gov. uk and check if the vehicle has been recalled due to a safety issue on gov. uk
Ask to see the V5C vehicle registration certificate and check that it has a ‘DVL’ watermark. Also, the serial number should not be between BG8229501 and BG9999030, or BI2305501 and BI2800000. If it is, it could indicate the V5C is stolen and a buyer should inform the police as soon as it’s safe to do so.
The details in the log book should correspond with the information you were given
Check the vehicle identification number found on the chassis of the vehicle, and its engine number also matches the details in the logbook.
