Car Write-offs and Insurance Claims
If you’re buying a used car, there’s a small chance it could have been written off at some point in the past. That may conjure a horrific image of your car being wrecked in a dramatic car crash, but in truth, many cars are written off by insurers for seemingly minor damage. In fact, many write-offs can be repaired to a perfectly safe, road-worthy and legal standard.
Whether you’re horrified at the thought of buying a written-off vehicle, or tempted by the possibility of bagging a bargain, understanding more about car write-offs will help you make an informed choice.
The definition of an insurance write-off
You’ll hear the phrase “car insurance write-off” or “total loss” for a car that is either
- so damaged that it wouldn’t be safe to go back on the road
- it could be safely repaired, but it would not be economically viable for the insurer to do so.
If you’re involved in an accident, instead of paying for repairs, you’ll receive a cash pay-out from your insurer (minus any policy excess) for its market value before the loss.
Car write-off categories in the UK
Not every write-off is the same. UK law sets out six different types of write-off category, described in the table below. Two of these are no longer actively applied to vehicles written off after October 2017, but you may still come across them on the second-hand car market.
Some categories mean the car is so badly damaged it can’t ever go back on the road again (it is literally a “total loss”), while others allow for the car to be repaired to a safe, roadworthy condition.
Types of car write off
|Write-off Category||Repairing the vehicle||Using the vehicle|
|A||Cannot be repaired||Entire vehicle has to be crushed|
|B||Cannot be repaired||Body shell has to be crushed, but you can salvage other parts from it.|
|C||Can be repaired, but it would cost more than the vehicle’s worth. This category was made inactive in October 2017, but it’s still possible to buy a Cat. C vehicle on the second-hand car market.||You can use the vehicle again if it’s been professionally repaired to a roadworthy condition.|
|D||Can be repaired and would cost less than the vehicle’s worth, but other costs (such as transporting your vehicle) take it over the vehicle’s value. This category was made inactive in October 2017, but it’s still possible to buy a Cat. D vehicle on the second-hand car market.||You can use the vehicle again if it’s been professionally repaired to a roadworthy condition.|
|N||Can be repaired following non-structural damage||You can use the vehicle again if it’s repaired to a roadworthy condition. You’ll need to inform DVLA that the car was written off, but there’s no need to get it re-registered.|
|S||Can be repaired following non-structural damage||You can use the vehicle again if it’s repaired to a roadworthy condition and re-registered with DVLA. An updated log-book (V5C Registration Certificate) will be issued, marked with an “S” for salvage, to inform future owners that the vehicle was once written off.|
What’s the write-off procedure?
If you’re making a car insurance claim and waiting for your car’s damage to be assessed, it’s helpful to know what happens if it’s pronounced a write-off.
If the vehicle can’t be safely repaired
Firstly, the insurance company needs to decide if the car can be repaired to a safe standard. If it can’t, it’s declared a write-off. This type of write-off will be Category A or B as described above.
If the vehicle can be safely repaired
If repairs are possible to a safe and roadworthy standard, your insurer will make a calculation on the ratio of estimated repair costs to the market value of the car.
This ratio can vary from one insurer to another but generally, if repair costs exceed 50-60% of the car’s value, the insurer usually deems it economically unviable to repair, and the car is declared a write-off. This type of write-off will be Category N or S as described in the table above.
Why does minor damage still result in a write-off?
Sometimes a car that has only suffered minor damage is still written off by your insurer. That can easily happen if the repair-to-market-value ratio doesn’t go in its favour. In this situation you might consider buying the car back and getting the repairs done at your own expense. We cover this in more detail below.
It might seem to you that a car which has suffered only minor or cosmetic damage could be repaired more cheaply; however, the insurer will base their calculation on estimates from an official repair centre using replacement parts directly from the manufacturer, which will increase costs considerably.
Settling write-off claims
Having established that your vehicle is a write-off, the insurer will offer you a cash payment to settle the claim, based on your car’s market value before the loss. When you accept their offer, the car becomes the property of the insurance company. They will either scrap it (especially for Category A and B write-offs) or sell it.
Do you still pay an excess for write-off claims?
Yes. Just like any other claim under your policy, when the insurer settles the claim, they will deduct the excess. If the claim arose out of a non-fault incident, however (e.g. a third-party driver crashed in to you), you should be able to reclaim your excess from the third party’s insurance company as an uninsured loss.
Will my insurance premium be refunded?
If your car is written off just part way through your 12-month insurance period, you might expect to get a refund on your insurance premium for at least part of the remaining period.
Unfortunately, this isn’t usually the case. The terms and conditions of many policies state that you cannot cancel your policy part-way through the year if you’ve already made a claim.
If these are the terms of your policy, you wouldn’t get a refund if you pay annually. And if you pay monthly, you must keep up the instalments until the policy ends.
Cars depreciate in value all the time, so don’t expect your insurer to offer you the same as you paid for it. However, they must settle your claim at a level that would enable you to buy the same car, in a similar condition to the one that’s been written off (i.e. similar age, condition, mileage etc.).
If you think that the write-off figure offered by your insurer is too low, what can you do?
- First of all, don’t agree to the insurer’s settlement offer if you’re not happy with it. It will be almost impossible to argue a case to increase the offer after you’ve accepted it.
- Secondly, prepare yourself for doing lots of research and presenting your insurer with evidence to back up your claim for a higher offer.
- For an idea of your car’s market value, check Parkers online or ask your local car dealer to check Glasses Car Guide, both widely respected in the motor industry.
- Gather evidence from local papers, online salerooms or dealer forecourts. Look for cars of the same make and model, of a similar age, condition and mileage as yours.
- Consider any other facts that could justify a higher settlement figure. For example, modifications which added to the car’s value, very low mileage, a new set of premium tyres in the recent past etc.
You’ll probably need to find evidence of several vehicles at a higher value than the offer from your insurer; a single, over-priced vehicle won’t be enough to back up your argument.
Consider your insurer’s first offer as a starting point for negotiations, as long as you can back up your objection with evidence to support a higher valuation.
Can you buy back a write-off from your insurer?
If the insurer was going to sell a Category N or S write-off anyway, you might want to buy it back and get it repaired at your own expense. After all, a car with minor damage may not be economically viable for your insurer to repair, but it might make sense for you to do it.
If you want to buy back an insurance write-off, make the insurance company aware of your interest at the earliest possible opportunity. Keep them informed of your wishes during the claim process. Insurers often have arrangements in place with third-party salvage firms, and may be reluctant to alter them to sell the car back to you.
Have an independent mechanic look over the vehicle. They will give you a good idea of what it might cost you to repair, to help you negotiate the best possible deal with the insurance company.
What if you have outstanding car finance?
If your car is a write-off but there is outstanding finance on it, you may be in the unfortunate position of being offered a settlement figure that is lower than the amount you still owe the finance company.
- Is it possible that the insurance company has under-valued your car? If you think this is the case, you need to follow the tips outlined in the section above on write-off disputes. There’s no guarantee that your insurer will revise their offer, though. And if they do, it still might not be enough to pay off the remaining finance.
- If your car is a Category N or S write-off, another option is to use the cash pay-out to buy back the car from the insurance company and get it repaired yourself. This is helpful, as you’ll still have the use of the car and will be able to continue your payments to the finance company.
- Did you buy GAP insurance when you bought your car? Guaranteed Asset Protection insurance helps you bridge the gap between what you paid for your car and the insurance payout you’ll get if it is written off.
Let your finance company know the situation and ask them for advice. Hopefully you’ll be able to come to an agreement that works for you both.
Car write-offs when you’re not at fault
What happens if your car has been written off and you weren’t at fault? Will a non-fault write-off affect your no claims discount?
Put simply, if your own insurer is out of pocket after a write-off claim, your no claims discount will probably be affected. However, if the third-party insurer accepts that their driver was at fault, your own insurer should be able to recover their outlay. In that situation, your no claims discount should be safe.
What happens if you only have third party insurance? If your vehicle is written off in a non-fault accident, you could find yourself with no car and no money to replace it. It may be possible for you or a solicitor to make a claim against the third party’s insurers and negotiate a write-off settlement with them.
Liability after an accident is seldom a black-and-white issue, though, so never assume that decisions will go in your favour, no matter how convinced you are that you’re in the right!
Find out if a car has been written off
It’s one thing to knowingly buy a bargain-price Category N or S write-off vehicle; it’s quite another to be duped into buying one, even if it’s legally safe to be back on the road.
Unfortunately, on rare occasions, criminals operating car write-off scams still manage to get Category A or B vehicles back into circulation. This poses a potentially lethal risk to new owners. And some unscrupulous car dealers will conceal the background of a Category N or S write-off vehicle to push the price up.
So it’s important to check a car’s history before you buy it. There are plenty of online resources offering this service at a very reasonable cost, which will reveal if a car has previously been written off. HPI, Autotrader and RAC are three reputable examples.