How insurance companies decide when to write off your car
Insurance providers go through a thorough process to determine whether to write off your car.
Naked Insurance recently provided a comprehensive guide to educate its clients on what this process entails.
Firstly, when you make your claim, an assessor will be appointed to determine the repair costs.
According to the guide, insurers will usually write off a vehicle if the assessor determines that the repair costs will exceed 50-75% of the value.
Other factors taken into account include the severity of the damage, the age of the car, the availability of parts, and the condition the vehicle was in before the accident.
If your car is written off, you will then get a payout – the value of which will depend on your policy.
If you have good cover, you can expect the retail or market value of your vehicle, minus your excess.
Clients who financed their car will first have their payout go to the bank to settle any remaining loans.
If this figure doesn’t cover the loan cost, including the balloon payment, you will need to pay the shortfall, and if you are left with a surplus, the remaining money will go straight to you.
What happens to your car
Usually, the insurer will take your vehicle and sell it at an auction or for its scrap value.
However, in some cases, your insurer may allow you to buy back the written-off car.
If you decide to go down this route, your insurer will take the salvage value of your car and subtract it from your payout.
The vehicle will then be in your possession – and you can work on getting the car fixed, registered, and roadworthied.
It is important to note that these vehicles will often be marked as a salvaged vehicle, which will affect the future sale price of the vehicle, as well as future insurance premiums.
According to Daily Investor, South Africa’s write-off codes are as follows:
| Code | Meaning | Details |
|---|---|---|
| Code 1 | Brand-new car | Sold by a dealer to its first owner. |
| Code 2 | Used car | Has at least one previous owner, may have been damaged in an accident but can be repaired and put back on the road. Also applies to stolen cars re-registered for licence plates. |
| Code 3 | Structurally damaged car | Has been in an accident and is no longer safe to drive. If rebuilt, it does not meet manufacturer standards and must pass strict tests before returning to the road. |
| Code 3A | Irreparable car (for parts only) | Permanently unfit for use, cannot be repaired to a roadworthy state. Deregistered and destined only for the spares market; record is blocked and cannot be re-registered. |
| Code 4 | Demolished car (not for use or parts) | Irreparably damaged, with no major components usable. Deregistered as demolished; cannot be re-registered or used for spares under the National Road Traffic Act. |
Car buyer warning
While the above are the official requirements when a car is written off, South Africans should be vigilant when buying a second-hand car to ensure that everything is in order.
Nedbank recently noted that some written-off cars are sometimes poorly repaired and sold to unsuspecting South Africans.
“Sometimes, unscrupulous people fix up written-off cars and sell them to shady dealers who sell them on to unsuspecting buyers,” said Nedbank.
“This puts drivers and passengers at risk, because the vehicle no longer meets the original manufacturer’s safety standards.”
Nedbank added that there several ways to vet a second-hand car, including using a VIN lookup system – such as the one it offers.
“Searching the database is easy and free. You simply fill in your name, identity number and the vehicle identification number (VIN) to learn about a car’s history,” Nedbank said.
“Each vehicle has a code that details its past. As a buyer, you need to pay attention to this history to avoid problems later.”
Loading ...
