What happens to my insurance if my car is written off?
22/07/2021
No driver wants to have their car written off, but if you ever find yourself in this situation it’s important to be aware of what it will mean for your existing car insurance policy – and how the three different levels of car insurance cover could affect the size of your payout.
How insurers assess write-offs
If your vehicle is involved in an at-fault accident and you file a claim with your car insurance provider one of the first things that will happen is the company will send out an assessor or engineer to inspect the damage.
They will use a range of criteria to decide whether your car should be written off, which would mean it’s either not safe to be driven again or it’s beyond what the insurer considers ‘economical repair’.
Different car insurance companies use different repair-to-value ratios to decide whether it’s worth paying for the vehicle to be fixed, based on the cost of the work compared to how much the car is worth.
An insurer’s decision to write off a vehicle sometimes comes as a surprise to the owner. If there is only a small amount of cosmetic damage, for example, you might think the vehicle is still perfectly safe to drive.
However, writing off the car will be the insurer’s default action if it considers the cost of repair to be uneconomical, regardless of how minor the damage might seem.
Write-off categories
It’s important to understand that writing off a vehicle is not a black-and-white process. There are a number of write-off categories, and the action that will be taken next depends on the category your vehicle is in.
When a vehicle is written off, it will be placed into one of the following six categories of vehicle write-offs:
- What is a category A write off?: The vehicle can’t be repaired and has to be crushed.
- What is a category B write off?: The vehicle can’t be repaired and the body shell has to be crushed, but other parts could be salvaged.
- What is a category C write off?: The vehicle can be repaired, but the work would cost more than its value. The vehicle can be used again if it’s repaired to a roadworthy condition.
- What is a category D write off?: Repair work would cost less than the vehicle’s worth, but other costs (such as transportation) would make it uneconomical. The vehicle can be used again if it’s repaired to a roadworthy condition.
- What is a category N write off?: The vehicle can be repaired following non-structural damage and can be used again if it’s repaired to a roadworthy condition.
- What is a category S write off?: The vehicle can be repaired following structural damage and can be used again if it’s repaired to a roadworthy condition.
Keeping a category C, D, N or S vehicle
As the above categories state, when a vehicle is written off by an insurer under categories C, D, N or S, it doesn’t necessarily mean it can never be used again.
If you want to keep a car that meets these criteria, the insurance company will give you an insurance payout and sell the vehicle back to you. It’s important to do your research to reach a fair settlement figure and to have an independent mechanic check the car so you know what condition it’s in.
You will then need to take responsibility for paying for the car to be repaired to a roadworthy standard.
Future insurers might have concerns about providing cover for a vehicle that has been previously written off or sustained serious damage in an accident. As a result, premiums are likely to be higher.
Some providers might accept a current MOT as proof that a car is roadworthy, but if you are involved in another accident in future, your insurer will look into whether the vehicle’s history was a factor in the event.
How each level of car insurance can affect your payout when your car is written off
If your car is written off and you have a fully-comprehensive car insurance policy your insurer will pay out the vehicle’s current market value.
Drivers with third-party, fire and theft insurance, on the other hand, will only receive this payout from their insurance provider if the car was damaged by a fire or was stolen and written off by a thief.
Drivers with third-party-only insurance would be the worst off, though, because they wouldn’t receive any payout from their own insurance provider if the car was written off and they were at fault. Of course, if the accident was caused by another driver they should receive the current market value of the car, but in that scenario, the insurance claim would be paid by the other driver’s insurer rather than their own.
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If my car is written off what happens to my insurance policy?
This can come as a bit of a shock to some motorists, but when your car is written off and you claim on your insurance you’ll still be required to meet your monthly insurance payments until the end of the policy, even if you no longer have the car.
Similarly, if you paid for the full year upfront you won’t be able to claim back the money for the remainder of the year, even though you’re technically insured to drive a car that is no longer on the road.
This can sometimes prove to be a bitter pill to swallow, particularly if the payout you receive from your insurance provider is less than the amount you’re going to end up paying during the remainder of your policy, but this obligation is written into the vast majority of car insurance contracts.
What happens to my financing agreement if my car is written off?
If you have purchased a car on finance that has to be written off after an accident, it’s possible the settlement figure offered by your insurance company won’t be sufficient to cover the outstanding repayments on your finance deal.
Firstly, look into typical market values for the vehicle and, if you believe the amount your insurer has offered is too low, present them with your evidence and try to come to a new arrangement.
If, however, the offer is fair but still not enough to cover your outstanding repayments, you will need to speak directly to your finance provider to work out the situation. One option could be to use the insurance payout to buy another car and continue with your usual repayments.
This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs when dealing with a vehicle assessment for insurance claims. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.