Suppose you are involved in a major car accident, and by the extent of damage to your vehicle, you can assume that your Insurance company might consider your vehicle junk. In technical terms, your insurer may deem your car a write-off.
Mostly a vehicle with severe damage will be termed a car written off and considered a loss. However, in some instances, even a vehicle with minor damage might be regarded as a loss.
So you might wonder what car insurance companies consider while deciding whether a vehicle can be fixed or should be sent to the scrapyard.
In today’s article, we will explain what happens when your car is written off and the various factors that insurance companies consider to determine it. Click here to learn about the best insurance policies.
What is a write-off and why was your car written off?
If you’re involved in a collision, your insurance company issues a write-off against your car. However, it can also be given if your vehicle is flooded or vandalized, destroyed in a fire or damaged in some other way like something heavy falls on it during a storm.
Your Insurance company might also write off your vehicle if it has a low market value. This is because while deciding whether to issue a write-off, your insurer considers the vehicle’s market value and how economical it would be if they paid for the repairs.
This also depends on the numerous regulations of the insurance company, and it varies from one company to another. Generally, they consider the model, age and make of the vehicle, and as a standard rule, if the cost exceeds 50 to 60% of the car’s value, it will be considered uneconomical.
For example, if your car has a market value of $10000, and after the accident, the repair cost is approximately $7000, it might be declared a car written off.
Once your insurance company issues a write-off, the ownership is automatically transferred to them. The vehicle owner will then receive a cash payout from the insurance company based on the current market value of the vehicle had they sold it before the accident.
Factors that insurance companies use to determine whether the vehicle is a write-off or not
Several factors are considered to determine the vehicle’s actual value:
- Year, model and odometer reading
- Condition of engine and other parts.
- Market survey reports and sales of similar cars in the same year.
- The vehicle’s market value as per industry-standard applications and car dealer websites.
Write-off categories
Car inspectors who determine whether the vehicle can be repaired economically or not consider categories to classify the vehicle’s condition, the amount of damage, and the vehicle’s safety.
1. Category A
It includes all the heavily damaged vehicles and is only fit for scrap. All vehicle parts have to be destroyed.
2. Category B
This describes a vehicle that has exterior damage and has to be trashed. All the undamaged parts can be used as a replacement for other cars.
3. Category S
In this category, all the cars which have suffered significant structural damage that can be repaired are included. But these vehicles are unsafe until they have been fixed by a professional.
4. Category N
All the vehicles falling in the category only have cosmetic or electrical damage, and there is nearly no damage to the structure. However, the steering wheel or the gearbox might be damaged, and the car might not be drivable.
Can you challenge the decision to write off your vehicle?
If you decide to challenge your insurance company’s decision, there is room for dispute since your car might have a sentimental value. In such a scenario, your insurer will appoint a licensed assessor to evaluate whether the repair cost is worth it. However, you might still get the opportunity to negotiate and keep your vehicle, but your insurer will deduct the salvage value from your compensation payout.
Now it is your responsibility to pay for the repairs and make it safe for public roads.
Can you repurchase your car if it is a write-off?
Whether you can buy your vehicle or not will depend on the amount of damage and the write-off category. So before deciding, you need to determine the extent of the damage. You also need to consider the damage to the non-structural parts of your vehicle, like the brakes, gearbox and steering wheel and then calculate the total cost of repurchasing and repairing it.
This calculation will help you determine whether you should buy a new car or pay for the repairs. The most important part is ensuring your vehicle is safe to drive on the road and has passed all the MOT regulations. However, you need to remember that once your car is back on the road, you might need to pay more to get car insurance.
What happens if you still owe money to your financer when your vehicle is written-off?
You can do two things:
- You can try negotiating for a higher settlement value with your insurance company
- You can contact your financer to find a better way to avoid penalty charges or interest payments.
What should you do if your car is written off?
You have a couple of options to deal with your written off car:
- First, you can always negotiate with the settlement offer for your vehicle and then represent your case with proof of your own.
- Each province in Canada has its salvage branding legislation. This organization determines your vehicle’s condition and whether it can be driven on roads.
So if your vehicle is determined ‘irreparable’, only the vehicle parts can be used, and the vehicle can never be repaired. On the other hand, if your car is termed ‘salvage’, you have to repair it first and then get it inspected by a registered inspector before you can legally drive it on the roads. So if there are no structural or safety issues, it might be possible to claim your damaged vehicle.
Endnote
It is always advised to research more about the damage to your vehicle before making any claim. If your car is in terrible condition, it is recommended that you accept the written-off statement and take the payment from your insurance company.