Motor Insurance - What is a write-off?
posted 20th April 2022
Insurance write-offs happen as a result of an accident involving your vehicle, but can also occur if your car has been flooded, destroyed by fire or accidentally damaged in some other way, such as animal impact or storm damage. When a vehicle is a write off it is referred to as Beyond Economical Repair.
The accident that causes the damage doesn’t need to be particularly serious if the vehicle has a low market value. This is because, when deciding whether to declare a write-off, the insurance company will consider how economical it would be to carry out repairs.
Unfortunately, whether repairs are ‘economical’ depends on the insurance company’s rules, the make, model and age of the vehicle, and the cost of repair. As a rule-of-thumb, costs that would exceed 50% - 60% of the vehicle’s value would be deemed uneconomical. For example, if your vehicle has a market value of £5,000 and repairs are estimated to cost £3,500, then it would most likely be declared a write-off.
If your vehicle is written off, ownership is transferred to the insurance company. You would receive a cash pay-out equivalent to the market value of the vehicle (the settlement figure). The vehicle is then typically stripped for parts and scrapped.
In some cases it may be possible for you to buy the vehicle back from the insurer for it’s salvage (scrap) value, have it repaired (at your own expense) and MOT’d, and continue to use it. If the vehicle has minor damage and has been written off just because it in un-economic to repair this is often a useful option, particularly for older vehicles where the market value payout is low. It should be noted however that if the vehicle is written off again at a later date the insurer will only pay out the salvage value, not the market value again.
Depending on the severity of the damage, this may not be an option. There are various write-off categories, some of which can be repaired and some that can’t. As of the date of writing this article the categories are:
Category A
Vehicles damaged so badly that they can only be scrapped and destroyed, including any salvageable parts.
Category B
Vehicles damaged to the extent that the body must be destroyed, although parts may be salvageable.
Category S (formerly Category C)
A vehicle that has suffered structural damage, but can be professionally repaired and put back on the road with a fresh MOT.
Category N (formerly Category D)
Vehicles that have not suffered structural damage, the damage may just be cosmetic but not economical to repair. These vehicles can generally be repaired and put back on the road with a fresh MOT.
When buying a vehicle it is always important to get a vehicle check as some sellers will pass of a Category S or N as a vehicle with no previous damage. As before, if you unwittingly buy a vehicle that has previously been written off, and then have a claim yourself that results in a write off, you will only be paid out the salvage value. Once a write off, always a write of, so Buyer Beware!