What to Do If Your Car is Written Off
If you're involved in a car accident, the logical next step is to make a claim with your car insurance provider. After this, they will either tell you how much they will pay you for the repairs, or they will tell you that your car is a write-off. But what does a write-off mean? And does this mean the end of your car? Read on to find out more.
In this guide:
- What is a write-off?
- Write-off categories
- Written off and purchased on finance?
- Can I purchase a write-off?
- What if I disagree that my car is a write-off?
Insurance write-offs happen as a result of an accident involving your vehicle. But it can also occur if your car has been flooded, destroyed by fire or accidentally damaged in some other way, such as a tree falling on it during high winds.
In fact, the accident that causes damage to the car doesn’t need to be particularly serious if the vehicle has a low market value. This is because, when deciding whether to declare a write-off, the insurance company will consider how economical it would be to carry out repairs.
Unfortunately, whether repairs are ‘economical’ depends on the insurance company’s rules and the make, model and age of the vehicle but, as a rule-of-thumb, costs that would exceed 50% - 60% of the car’s value would be deemed uneconomical. For example, if your vehicle has a market value of £8,000 and repairs are estimated to cost £4,500, then it would probably be declared a write-off.
If your car is written off, ownership is transferred to the insurance company. You would receive a cash payout equivalent to the value of the vehicle (the settlement figure) if it were sold in its pre-accident condition.
Insurance company assessors, whose role is to examine a car to decide whether it can be repaired economically and safely, use four categories to classify the level of damage and structural safety of the vehicle.
Category A applies to a car that is extensively damaged and is only fit for scrap. All parts, including salvageable ones, should be destroyed.Category B describes a vehicle that has significant damage to the body, which should be crushed. Undamaged parts may be salvaged and can be used as spares on other cars.
Category S damage refers to a car that has suffered structural damage but is repairable. However, it is deemed unsafe to drive until professionally repaired.
A Category N vehicle is structurally sound but may have cosmetic, electrical or non-structural damage. As this could include damage to steering or brakes, the car may not be driveable.
When a vehicle you have purchased on car finance is involved in an accident and subsequently written off by the insurance company, the situation is a little more complicated. Because the settlement figure matches the car’s pre-accident value, you may be offered a lower amount than you owe to the finance company. This could result in you continuing to pay for a car that you no longer own, or the lender may require you to repay the outstanding balance on your loan immediately.
While neither situation is ideal and could leave you short in the pocket, there are actions you can take.
If you feel the settlement figure from your insurance company is too low, you should be prepared to negotiate a higher price. However, you’ll need evidence that your car’s pre-accident value was higher than the amount you were offered.
If, however, the settlement figure is fair but lower than your outstanding loan balance as a result of high-interest rates, you should discuss this with your lender and see whether you can come to an arrangement.
A car that has been written off previously might sound like a perfect bargain, but it’s not a risk-free purchase. Considerable caution is needed to ensure that you remain on the right side of the law.
Firstly, you need to ensure you understand the write off categories, as one of these will be mentioned on the used car listing. Categories A and B describe vehicles that are not permitted to be driven on the road again, so you shouldn’t see these cars being sold. Categories S and N describe cars that are repairable – but not necessarily safe or legal. However, if you’re considering investing in a much older car, it may be that it has been written off for cosmetic damage only, as the pre-accident value will have been very low.
You’ll need to invest some time and expertise in finding out exactly how extensive the damage is, including to non-structural parts such as brakes, and map out the costings accurately to ensure that there is enough profit margin if you intend to sell the vehicle on. Remember, you remain liable for any deficiencies in the car if you sell it so it must be repaired to a standard that complies with MOT regulations.
However, if you’re looking to keep the vehicle for your own use, you may discover that the cost of repairs is far less than the price of a new car. So long as repairs are carried out by a qualified and skilled engineer, then purchasing a write off could be a shrewd move. Don’t forget to allow for on-the-road expenses once the car is repaired. Make sure you compare car insurance prices as your vehicle’s history will flag up when you call the insurance companies to obtain quotations.
You may not be keen for your car to be written off, particularly if it is of sentimental value or you feel you would be out of pocket as a result. While the insurance company’s assessor is appointed to evaluate whether repairs are economical, you can negotiate with the insurer and request that you keep the car and settlement figure, less the salvage value. In this situation, you’d need to arrange for repairs to be carried out independently, as you do not have the right to expect your insurance company to arrange those repairs.