Your Guide to Car Insurance Write-Offs

Posted on: 2 August 2021 at 4:24 pm
Front of gray color car damaged and broken

What is an insurance write-off, what happens to your car if it is written off and how are decisions made concerning what is a write-off and what is not? If you have never made a claim on your insurance for anything other than minor issues, such as needing a replacement windscreen, then you may not have faced the possibility of a write-off before. Read on to find out everything you need to know about the process.

What Is an Insurance Write-Off?

Firstly, write-offs occur in all sorts of insurance claims, not just cars. When a claim is made to repair something following accidental damage to it, the cost of doing so could be more than than the item is worth. So, for example, if you needed £6,000 worth of repairs to be conducted on a car that was valued at £5,000, then it would not be economical to proceed. It’d be more cost-effective to simply replace the damaged car with a similar second-hand one of about the same age and condition. Therefore, insurers may choose to write off the value of the car on their books rather than pay for uneconomical repairs to be carried out. It is the insurance company you hold your policy with which can make the decision on whether to write a car off or not so this is something that is outside the control of the owner.

Who Owns Written Off Cars?

When an insurance company decides to write off a car following a claim, they will become the legal owner of the vehicle. The insurance company is obliged to pay the owner a sum that reflects its pre-claim value, however, based on the current market conditions. In other words, rather than spending more money to repair a vehicle than it is worth, insurance companies have the option of buying the car from the owner instead, something that makes the insurance system cheaper to run and helps to ensure severely damaged cars are removed from the road.

How Does the Write-Off System for Car Work in the UK?

Frustrated woman next to wrecked car

UK motor insurers use a code system for cars that are to be written off. The first is category A which is usually reserved for old or very damaged cars. They are essentially considered to be waste and will be crushed for scrap. Category B, on the other hand, will have some salvageable parts that can be removed. Other than that, the remains of the car will be scrapped in the same way as category A ones. Category S means a car that has undergone structural damage, usually to the chassis, but which will not be repaired even though it is feasible to do so. The final category is N. Like category S, write-offs in this group could be repaired. The main difference is that the damage is not structural although certain important parts may be broken, such as the steering system.

Calculating the Value of a Write-Off

Your insurer will scour the market for second-hand cars of your write-off’s age and mileage to come up with a reasonable valuation. Remember to deduct your policy’s excess from this value because the insurer will only pay out for sums over this value.

Advice on Whether to Buy Your Written Off Car or Not

Once you’ve been paid for your write-off, it is sometimes possible to buy the car back from the insurance company. You could then choose to scrap it yourself or to have it repaired. If you are a mechanic, then this might be appealing but remember that having damaged cars professionally repaired for you will often mean forking out for both parts and labour. You need to make sure you think you can have your car return to a roadworthy condition for less than your insurer thinks you can to make this economically viable, of course. 

Write-Offs and Car Finance

If your car has been written off, then you are still responsible for the loan you may have taken out to purchase it. The insurer will not be responsible for covering this. That said, many payouts will be enough to settle the loan. If it is not, then you’ll need to talk to the finance company about how you can spread out the cost of the remaining sum.