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What is an insurance write-off?

01 Sep 2011 at 15:40

If you’ve been involved in a car crash then you might be informed by your car insurance company that your vehicle is what’s known as a 'write-off'. This usually means the car will be retained by the insurance firm, instead of being repaired, with the owner receiving a cash payout for the loss.

But what exactly does the term 'write-off' actually mean? Well, it is industry jargon for a car that’s sustained so much damage it’s unsafe to go back on the road, or one that’s beyond economical repair. In the case of the latter, an uneconomical repair is based on a repair-to-value ratio which can be different for each insurance company and car.

Your car insurance company should able to tell you this figure, but here’s an example: if your vehicle was worth £5,000 and your insurance company used a repair-to-value ratio of 60%, the vehicle would be considered beyond economical repair if the work needed exceeded £3,000.

Car insurance companies employ vehicle assessors to calculate the cost of repairs and make this judgment. They will inspect the overall condition of your vehicle and analyse the collision damage.

Why do cars get written off?

Car insurance companies work to strict guidelines. They have a duty to return a car to the condition it was in before the accident. However, this can be expensive: it dictates which workshops and parts might be used.

All this is factored into the calculations insurance assessors use, so costs can soon rise. This is why write-offs do not always have to be particularly serious. If a car is new, a simple cosmetic scrape along one side can see it declared a write-off by the assessor: the expense of repairing and painting the panels can exceed the vehicle's actual value, even if there is no serious structural damage.

Car insurance write-off categories explained

Car insurance assessors use various categories of car insurance write-off to rank the seriousness of accident damage. Two categories represent very serious damage, but the remaining two categories are for 'economic write-offs' – where damage is expensive to fix but not necessarily dangerous.

Category A: scrap only. For cars so badly damaged they should be crushed and never re-appear on the road. Even salvageable parts must be destroyed.

Category B: body shell should be crushed. Signifies extensive damage, although some parts are salvageable. Should never re-appear on road, although reclaimed parts can be used in other road-going vehicles.

Category C: the vehicle is repairable but the costs exceed the vehicle’s value. Can re-appear on road.

Category D: the vehicle is repairable but repair costs are significant compared to the vehicle value – including time delays to source parts. Can re-appear on road.

The ABI Salvage Code dictates that Category A and Category B cars should be crushed, with Cat B vehicles allowed to donate some safe and serviceable parts.

However, write-offs in the latter two categories can be sold on by the insurance company, either to the original owner or to a third party via a car salvage company. Cars written off as a Category C case, according to the ABI’s Salvage Code, “require a Vehicle Identity Check (VIC) before a V5C registration certificate is re-issued by the DVLA.” The VIC is carried out by the Vehicle Operator and Services Agency (VOSA).

As no notifications are made to the Driver and Vehicle Licensing Agency (DVLA) or VOSA when a car is written off in a Category D situation, the vehicle is not subject to a VIC before it is allowed back on the road – just make sure the repair work has been carried out to a safe and satisfactory standard.

Cars in the latter two categories can sometimes represent a bargain, if they are priced accordingly. An older car can be repaired to an acceptable standard at a lower cost than that dictated by an insurance company’s standards – especially if used parts or cheaper labour are used.

Buyer beware

Some sellers try to pass off Category C or Category D cars as non-damaged motors by hiding their past. If the buyer does not carry out an HPI vehicle history check, they might not be aware the car has previously been damaged and so could pay over the odds for an insurance write-off.

Suffering an accident that leads to a vehicle write-off is distressing. But unwittingly purchasing a written-off vehicle and paying more than market value for it is painful too.

Make sure you know how to interpret the jargon and are fully aware of a vehicle's past so you don't get caught out by an unscrupulous seller.

Have you ever been involved in a car accident where your vehicle was written off? What did you have to do?

Maybe you’ve bought a Cat C or D insurance write-off in the past – either knowingly or unknowingly. Share your experiences with us on our official RAC Facebook page https://www.facebook.com/RAC or Twitter feed https://twitter.com/rac_breakdown .