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Legal guide to UK motoring, sections for law enforcement, Driver licensing, learner and new drivers, buying and selling, speeding fines, owning a vehicle, wheel clamping, traffic information.

Vehicle Insurance


How does a car become classified as a write-off?

An Insurer will perform a reasonably precise calculation to ascertain whether a car should be deemed a 'write off' (we prefer to think of damaged cars as 'write offs' as opposed to 'total losses' as Insurers usually make a recovery from a damaged car, if only the salvage value). The calculation made by the Insurer, or their engineer is, simplistically as follows:

For an example: Damaged vehicle with a PAV (Pre Accident Value) of 10,000.

Repair Costs:

Parts 5,000
Paint 1,000
Sundries 100
Labour 4,000

Total 10,100

If the total repair cost for the above vehicle is 10,100 and the vehicle has a value of 10,000 it makes sense to write it off; pay 10,000 (less the excess - the first part of any claim the Insured must pay) and save the extra 100 associated with the re-building cost. If the repair amounted to 9,900, it may appear economical to repair the vehicle but is it worth taking the chance?

There are always the 'hidden extras' to consider; the additional damage that may be discovered once work commences. If you repair a vehicle, there are other problems that may arise; the owner may not like the standard of work completed, minor niggles may arise from problems believed to be associated with the accident. These factors can make writing a vehicle off more attractive than undertaking repair - easier to agree a wad of cash for the vehicle and let the owner replace their vehicle - end of liability (whilst problems associated with repair may be referred to the repairer to reconcile, they can reflect badly on the Insurer who approved the repairer).

But what about the salvage value. If the car were a 'write off' and the Insurer decided to pay their Insured 10,000, the salvage would become the property of the Insurance company and could be sold. Many Insurers have fixed fee arrangements with salvage agents. In the above example, if the Insurer has a fixed fee arrangement with a salvage agent which results in their obtaining, for example, 20% of the P.A.V., the Insurer would receive 2,000 (20% of 10,000, the PAV) the loss is reduced to 8,100 by recovery against the salvage - still more reason to write the car off. In this example, if the repair exceeds 8000, it makes sense (economical) to write it off. Vehicles can also be written off by adding hire charges to the equation; the damage may not in itself be sufficient to write the vehicle off but, take into consideration an Insured or a Third Party having use of a hire car attracting daily costs the loss soon mounts up. Courtesy cars can off-set the loss but are not always available. If the Insurer makes payment to the Insured (or third party) that person is now in possession of funds to purchase a vehicle, ending the need for a hire car (with associated charges). Additionally, vehicles replaced under 'new for old' schemes (often where the damage exceeds 60% of the PAV) increase the pool of total losses.

A vehicle can, as will be realised from the above, undergo a substantial amount of damage before it is deemed a write-off. If the vehicle has been deemed a write-off it will appear on a central register, such as Hpi. An enquiry of the vehicle will reveal the history and enable a prospective purchaser to undertake an examination to ascertain the vehicle's condition. You can learn of this history. What of the vehicle involved in a substantial accident but the calculation caused the repair cost to fall just below the amount required for an Insurer to deal with it as a total loss? In theory, an Insurer arranged repair of the vehicle and (given approved repairer schemes) the condition of the vehicle should be commensurate with a vehicle of similar age and mileage. The vehicle will have been returned to the insured, repaired and put to use. Total loss vehicles have not been repaired on the authority of an insurer; they have not been returned to their insured, someone who knew the vehicle's condition prior to the accident and who subsequently had use of the vehicle.

An insurer approved repair will involve bona fide repair facilities using new parts in a relatively controlled environment. The repairers are accountable to the insurer and the insured, the acquisition of parts and the work entailed will be documented, an audit of the repair can occur if necessary. How has the vehicle been repaired, if not under the authority or supervision of an insurer? The immediate concern is that some one, to reduce costs, has cut corners; effected a cosmetic repair. We are not discussing category B salvage (bent chassis - heavy damage) in respect of which the DVLA will not issue a V5. These are vehicles which an Insurer, possibly using relatively high labour charges and new parts, has calculated to be too costly to repair. On a vehicle over 3 years old (as an example), using secondhand or other than the manufacturer's parts may have a dramatic effect on the costs. Similarly, savings can be made on labour charges.

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