Insurer: "Sorry Sir/ Madam, I'm afraid your car is a write off!"
Not exactly the reassuring words you want to hear after reporting a car accident to your insurer. However, car insurance write offs are more common than you think. So if this happens to you, what does it mean for you and your insurance policy?
Read on and all will be revealed. Including:
What is a car insurance write off?
Insurance write off categories - explained
What happens to your insurance if you write off your car?
How much will you get if your car is written off?
Can you challenge your insurer's settlement offer?
How is an insurance write off calculated?
What if you write off a car that you are still paying for?
What is GAP insurance? And do you need it?
Can you transfer your insurance policy to a new car after a write off?
Can you buy your car back if it's written off?
As you can see, there's lots to cover around this topic - and we're barely scratching the surface. So, let's get started.
Contrary to popular belief, a car insurance write off doesn't always mean that your car has been smashed to smithereens.
A car is classified as a write off if the cost to repair it is more than your insurance company thinks it's worth. This is otherwise known as a total loss.
For example, say someone drove into the back of your 12 year old Toyota Yaris. The cost to repair it would be likely to exceed its value, in which case it would be written off.
This means your insurer would offer you a payout (or settlement), which should be enough to replace your car with one of a similar value (minus your policy excess). So of your insurer valued your Yari at £500 and your excess was £80, you would get £420.
Alternatively, if someone drove into the back of your shiny new Bentley Continental (one can dream), the repair cost would be unlikely to exceed the value of the car, hence it wouldn't be written off.
Having your car written off doesn't necessarily mean you have to watch it get towed off into the sunset. You can buy it back from your insurer. We'll investigate this further in a minute.
First let's look at the different categories of insurance write offs.
Until 1 October 2017, the ABI's insurance write off categories were based on the cost of a repair. Now, they focus on the condition of the car and how safe it is to drive.
CATEGORY A: Sadly, the only place for these vehicles is the scrap yard.
CATEGORY B: These car have been seriously damaged and really should not return to the road. BUT. If they have significant financial or sentimental value, they can be repaired.
For example, if you wrote off your classic car, chances are; your insurance would have a salvage clause. This would enable you to keep parts for renovation.
The insurer will usually arrange for your car to be scrapped with a Cat A or B write off. However, you still have to do these two things:
CAT S: These involve structural damage, but they can be repaired and returned to the road. Although you do have to re-register your car with the DVLA.
CAT N: These write offs can also be made roadworthy again. They are written off for non structural reasons, such as scratches or damage to lights. You don't need to re-register them, but you do still have to tell the DVLA that they were written off.
Well, it's likely to be one of three things.
Will your premium rise after totalling your car? Yes. It's highly likely. But before you panic, there are things you can do.
Take a look at our 11 smart tips to save you money on your car insurance.
The million dollar question! Your insurer will calculate the market value of your car before it was written off. They will take its age, mileage, condition, etc. into account and offer what they think it's worth so that you can replace it with a similar vehicle.
For example, if you wrote off a well looked after 2012 Ford Focus Ecoboost with 60,000 miles on the clock. It should be worth about £6,500. That's what your insurer should give you (minus your policy excess).
It's rare that insurers and car owners will agree on a car's worth. For this reason, negotiation is key and you should never accept their first settlement offer.
Before you go into battle, do your homework. Investigate how much similar cars in your area are being sold for, speak to car dealers and get an independent engineer's report. Just remember that a report will cost money that you're not guaranteed to get back.
Insurance companies use a repair-to-value ratio to calculate whether fixing your car will be economical or not. These vary between insurers but they tend to hover between 50-70%.
If your insurer calculates your car's market value at £5,000 and their repair-to-market ratio is 50%, it will be written off if the cost to repair it is more than £2,500.
The first question is do you still have to pay it off? In short, yes you do. It's just like any other loan and you must pay it off in full. Hopefully, your insurer will give you a fair settlement offer, but it's more than likely that there will be a shortfall between the amount you get from your insurer and your outstanding loan. This where GAP insurance can pay off. Have you got it?
Never heard of GAP Insurance? No problem. Chances are, you probably won't need it, but there can be occasions where it could really pay off.
GAP Insurance stands for Guaranteed Asset Protection. It provides protection that you will get what you paid for your car if it's written off. It can be a good idea if you have a nearly new car especially if you're paying for it on finance. If you have a brand new car and you have fully comprehensive motor insurance then if your car gets written off in the first year you probably should get a replacement brand new car anyway - so check your motor insurance policy before you buy GAP insurance.
Imagine you paid £25,000 for a brand new car and wrote it off just after a year later. Thanks to depreciation, your insurer offers you £16,000 for it and there's not a lot you can do about it. If you had GAP insurance, you should still get the £25,000 you paid for it.
It's also useful if you bought your car on loan. If you wrote it off, your insurer's settlement offer could be thousands less than what you still owe and you could be seriously out of pocket.
However, remember that your insurer will pay for a replacement car regardless of whether you have GAP Insurance or not. And it should be a fair reflection of your car's value. Plus, if you write off your car and it's less than a year old, you will always get a brand new replacement.
Most insurers give you 28 days to transfer your old policy to a new car. Here are a few things to bear in mind before you do:
Yes, you can. Well, sometimes. CAT S or CAT N write offs can be bought back relatively easily, but it's not always possible with a CAT A or CAT B because of the severity of the damage.
So, how do you buy your car back once it's been written off?
We hope that you've found this guide helpful. We also hope that you won't ever need the information we've shared. However, if you do, now you know what an insurance write off means and what you are entitled to.
Tell us: Have you ever written off your car? How did it affect the cost of your insurance?
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