Aside from the completely unpleasant experience of being involved in a car accident, several aspects of the experience can make it even more unbearable, including having your car “written off” by your insurer.
The term “write off” is used when an insurer does not believe that repairing the vehicle makes financial sense or is not safe to put back on the road.
This is according to Ernest North, co-founder of Naked car insurance, who notes that it can be a frustrating experience, especially if the car doesn’t look that badly damaged.
North explained that an insurer may decide to write off a vehicle after a major accident, if it is badly damaged by fire or severe weather, or even if it is recovered in poor condition after being stolen.
“When you submit a claim, the insurer will appoint an assessor to inspect the vehicle and calculate the cost of repair,” says North.
“If the repair costs are high compared to the car’s value, the insurer may decide it is a total loss rather than something that should be repaired.”
Thresholds for this value may differ between insurers, although a common rule of thumb is that a car will be written off should repairs exceed 50-75% of the vehicle’s value.
“In simple terms, the insurer is weighing up what it would cost to repair the car properly and safely, against what the car is worth,” North explains.
“If the numbers don’t make sense, or there are safety concerns, it’s more likely to be written off.”
Key factors that influence an assessor’s decision to write off a car include the severity of the damage, especially structural damage to the frame of the car.
A vehicle’s age and condition are also taken into account, with insurers unable to justify fixing a car for more than its book value.
Parts availability may also be a factor, as luxury or imported vehicles may just be too expensive and slow to repair.
Should the assessor decide to write off the vehicle, insurance will pay out the insured value of the car instead of paying for the car to be repaired.
North explains that the payout is based on the terms of your policy, usually the insured or market value of the car minus the excess.
“Many people only realise after the fact that the settlement is first used to cover the outstanding finance,” says North.
“If there’s a shortfall — meaning you owe more than the insurer pays out — you’re responsible for that gap unless you have shortfall cover.”
What happens to scrapped vehicles
Most often, once a claim is settled, the insurer becomes the owner of the vehicle, either to sell it as salvage or scrap.
In other cases, insurers may allow the owner to buy back their wreck, subject to bank approval.
“In this case, the insurer deducts the car’s salvage value from your payout, and you will take responsibility for repairs, roadworthy tests and re-registration,” explained North.
Once a car is written off, it will carry a salvage record, which affects future insurance, financing and resale.
“A salvage title is essentially a permanent marker on the vehicle’s history,” noted North.
“Even if the car is repaired and looks perfect, the record can still influence what you can do with it and how easily you can insure or sell it later.”
Write-off codes work as follows:
- Code 2: Still considered a used car that can be repaired and registered normally.
- Code 3: Severe structural damage, but it can be repaired. It must be rebuilt and re-registered as “rebuilt”.
- Code 3A: Beyond repair and generally stripped for parts.
- Code 4: Completely destroyed and must be scrapped.
Code 2 and 3 vehicles can be re-registered and allowed back on South Africa’s roads, although this is subject to a roadworthy test, and will affect long-term resale value and insurance premiums.
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