Your insurance company has a duty to replace or return any insured items to you in the same condition that they were in before a mishap occurred. This is the insurer’s obligation and is the reason why you pay your monthly premiums. There are, however, circumstances where an item simply cannot be fixed to the extent where it can live up to its previous standards. In this case, it will be written off and will need to be replaced altogether. In most instances, an insurance write off is referred to as a scenario where a motor vehicle has been in an accident.
While some of us would like to keep our familiar cars and would prefer to get them repaired instead of losing them altogether, this is often not possible. A car might cost more to repair than it would be to simply purchase a similar (or the same) model vehicle in perfect working order or it might be damaged so severely that it would not pass the applicable road-worthy tests, making it valuable for salvaged parts only. This is when an insurer would sign the car as a write off because paying the insured party out would possibly be the only solution or it would be the more economical option for both signatories.
What Is an Insurance Write Off?
In the insurance industry, brokers and agents will often use the term “write off”. This is industry jargon and refers to motor vehicles that are:
1. Not roadworthy due to extensive damage or;
2. Are safe to drive but are beyond economical repair.
In a situation where a vehicle has been deemed unsafe, then the insurance company will pay out a sum of cash instead of attempting to repair it. If, on the other hand, a car is safe to drive but still needs to be repaired, it will be declared a write-off when taking a repair-to-value ratio into consideration. This ratio varies between insurance companies but for the most part it is worked out similarly to the following:
Let’s say that your car is worth £10,000 and your insurance company used a repair-to-value ratio of 60%. If the repair to the vehicle is quoted to exceed £6,000 then it might be ruled that the costs to fix the vehicle are beyond economical, which will result in a write-off.
How Does an Insurer Determine If A Car Is A Write Off?
When your car is in an accident, your insurance company will send out a vehicle assessor or an auto engineer to access the damage and then calculate the costs of repairs according to his or her judgement.
These assessors follow strict criteria to arrive at the most economical and fair conclusion. If the damages will cost little to fix and with little effort, then the insurance company will cover the repair fees. If the vehicle is deemed a write-off, on the other hand, the insurer will make a cash payment to the insured which usually equals the worth of the value of the car before the damages were present. Sometimes the insured will be requested to pay a small excess fee in both scenarios.
Insurance Write Off Categories
This is the most serious of the four classifications and if your vehicle fits into category A, it means that the car is only suitable for scrap and cannot be declared safe to drive under any circumstances.
In this scenario, the assessors will write-off a vehicle even though there are some parts of the car that can be salvaged. While these parts are still in good working condition, the vehicle as a whole does not meet roadworthy criteria. Often the salvaged parts are sold to mechanics and will be used as spares to replace the pieces of machinery in other same-model cars.
Category C (also referred to as category S)
Vehicles that fall into category C are ones that could actually be repaired to good working order and condition, but the cost of repairs would exceed the value of the car. In this event, it would be more cost-effective for the insurer to pay out a cash sum to the insured.
Category D (also referred to as category N)
This is the least severe classification. It refers to vehicles that have been damaged but the structures are still intact. While this damage is non-structural, safety-critical features such as brakes or steering could be negatively affected. Category D (N) write-offs may be repaired to be roadworthy, but only after they have been fixed and extensively tested for safety.
It might be worth noting that a car’s value can also affect its likelihood to be categorised as a write-off. To try to give you an idea of what this implies, a modern and brand spanking new car that comes with a hefty price tag will need to have incurred extensive damage before it is considered as a write-off. An older rickety vehicle with little value, on the other hand, only needs minimal cosmetic damage to be written-off.
What Will Happen to The Car Once It Is Written Off?
If your vehicle was in an accident and the insurance assessors deemed both the damage and the costs unworthy of the repair, then the insurer will offer what they consider to be the market value of the vehicle. In essence, this means they will buy the damaged car from you. Then, depending on the severity of the damage, the vehicle will either be scrapped or sold as is at an auction.
Sometimes an insurance company will allow you to buy the car back from them after they have paid out your claim. If this is your wish then you will be responsible for the repairs which need to be fixed strictly according to roadworthy standards, which is not always possible. You’ll also have to declare that it’s a write-off when you insure the vehicle or try to sell it once repaired. Many insurance carriers will refuse to insure a car that has been previously written-off, with good reason.