Any old iron – how insurance companies decide when your car is a write off
Insurers write off around half a million cars every year
but how do they decide what constitutes a write off and how
will you know if your vehicle is likely be a write off or
back on the road?
Firstly, what is a write off?
Also known as a total loss, a write off is a vehicle which
has been in an accident is either uneconomical to repair or
so extensively damaged that it should never be returned to
the road.
There are several factors that make up the insurance
company's decision to write off a vehicle but essentially
it's a judgement that is totally based on the cheapest
option available.
Insurance companies will "write off" a vehicle when the
cost of repairs is judged be more than the value of the
car. This is a more complex calculation than it first
appears because of the different costs involved with
writing off a car.
1. Scrap value of the car can be a deciding factor
Let's look an example. If your vehicle is worth £2500 and
repairs cost £1800 then surely you would expect to see your
vehicle back on the road?
Not necessarily. Car insurance companies take into account
the salvage or scrap value of the car when making the
decision. In this case, if your car is worth £700 or more
for scrap then the insurers will probably write the car off
because although they will pay you £2500 for the car they
will be able to get back £700 of that cost making it
equivalent to the cost of repairs.
There are borderline cases to consider too – looking at the
example above, if your car were worth only £400 in scrap
the insurer may well decide to write off the car assuming
that there is a high possibility that when repairs are
started the mechanics may find further problems not
revealed in the initial assessment, thus increasing the
cost of repairs.
2. Parking charges
Many garages charge insurers extremely high rates for
keeping "written off" vehicles on their premises. Insurers
may wish to write off a vehicle quickly to avoid these kind
of charges and then dispose of the vehicle at a salvage
yard.
3. Type of policy
Another deciding factor in whether your vehicle is written
off or not is the type of policy you have. For example, if
you have a new for old policy the insurer may be more
likely to write off the vehicle under the terms of your
policy.
4. Hire charges
Again, the cost of car hire charges can effect the decision
– if your policy includes a courtesy car the charges for
the hire of the car may prove too high for the insurers.
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