We've all heard the term, but what actually happens when a car is written off? And how are different levels of damage treated by insurers?
Being involved in an accident is always stressful, and often a traumatic experience. This can be compounded if a vehicle is too badly damaged to repair and is 'written off' by your insurer.
It's common knowledge what the term means: essentially the company insuring a car, bike or van, estimates the cost of repair exceeds the value of the vehicle itself. Industry data shows that as many as 384,000 vehicles are written off in the UK every year, the equivalent of one every 90 seconds.
While it is a common occurrence, the realities of each case can vary wildly. Here, we'll take a look at the different categories of write-offs, and what happens to vehicles deemed unfit for the road.
From A to N
When a vehicle is badly damaged following an accident, the first thing an insurer will do is assess the extent of the damage. This is based on both the cost of repairs (labour plus parts in simple terms) but also whether a repair can be carried out safely – this is where the vehicle's structural integrity may have been compromised.
Damage is categorised according to severity by the ABI (Association of British Insurers) as follows.
- Category A – the most badly damaged vehicles. These cannot be safely repaired and are destroyed in their entirety with no salvageable parts removed.
- Category B – badly damaged vehicles which cannot be safely repaired but have salvageable parts which can be removed before the vehicle is destroyed.
- Category S – vehicles which have sustained structural damage but can be repaired safely but where the insurer (or owner if self-insured) has opted not to carry out repairs.
- Category N – vehicles which have not sustained structural damage but may require some safety critical parts replacing (such as suspension or steering components), where the insurer (or owner if self-insured) has opted not to carry out repairs.
Why has my car been written off for superficial damage?
Drivers can sometimes be left bewildered by decisions made by their insurers. Low impact crashes at slow speeds such as a scrape in a car park can lead to cars being written off.
It goes back to the original definition. When an insurer assesses damage, it has to be both safe, and economical.
Sometimes, the cost to repair, replace and repaint of body panels can be deemed to be too expensive. On rare occasions, that can exceed the car's total value. This is less likely to impact higher valued cars but at the same time more complex materials such as carbon fibre can be more expensive to repair properly than conventional metal body panels.
How are 'written-off' vehicles kept off the street?
Once a vehicle has been written off, it will be destroyed in accordance with government guidelines and a certificate of destruction provided. Details are logged on the Motor Insurance Anti-Fraud Theft Register (MIAFTR) to ensure that a V5C for the destroyed vehicle can never be reissued.
Companies that dismantle and destroy damaged cars are required to keep accurate records to make sure that no vehicle can slip through the net.
What about stolen cars which are recovered?
Stolen vehicles fall outside the categories above. . If the insurer has settled your claim, then the vehicle becomes their property once recovered. Details will be logged on the MIAFTR and can never be deleted.
If you wish to buy the vehicle back, then you can discuss this with your broker and insurer, but the MIAFTR record will remain in place.
Retention of salvage
It is important to highlight that, if a vehicle is categorised as A or B following an accident, it cannot be returned to you under any circumstances. If it is a category B, you may be able to remove some parts if they are deemed safe for reuse .
For category S or N vehicles, you may agree a figure with the insurer to purchase the salvage. However, the value of a salvage vehicle may be negatively impacted after you have made the relevant repairs.
Some insurers will automatically write a car off if the repair cost is more than a set percentage of its value (whether agreed or not). If a vehicle is written off by the insurer under category S or N, then this will flag on the car's record, potentially impacting on its future value.
Use of second-hand safety critical parts, particularly structural, cannot be factored into declaring a vehicle to be safely repairable.
Classic vehicles are usually dealt with on the basis that repair costs are often significantly lower than the insured value. However, the regulations must still be followed to determine whether repairs can be carried out safely. For example, if a new body shell is used to repair a vehicle, then a points system determines whether the car can still be deemed an original, retaining its registration and vehicle identification number (VIN).
How do policies arranged by Lockton address written off vehicles?
Every policy we offer works to the correct industry guidelines. However, we understand that specialist, classic or high valued vehicles are not purchased simply as a means of transport. Neither are they just assets.These are prized possessions, with significant emotional value to their owners. This has to be factored in should the worst happen.
If your car is partially damaged following an accident and can be repaired safely, the policy will pay for the damaged parts to be repaired or replaced with the original manufacturer's parts where available, whichever is less, up to your agreed value. They will also make no claim deduction for depreciation.
This means the vehicle will not be written off by the insurer, avoiding the potential for this factor in isolation to impact value.
If your car is over 15 years old and, if as a result of the repairs it loses value, then the insurer will pay the difference between its pre- and post-accident values up to 100% of the repair cost or 25% of the vehicle's original agreed value.
Additionally, if it is impossible to replace matching wheels or upholstery due to them being obsolete, the insurer will pay up to £50,000 to replace them, on the basis that you will give them any undamaged items.
The car must have been purchased by you or valued within 2 years of the accident occurring.
Brand new cars will be replaced with an identical model within the first 24 months of registration.
Above all, Lockton is here to help if something goes wrong. If you have any questions or would like to find out more then please contact us.