What is a write-off?
The legislation can differ slightly from state-to-state, but there are generally two definitions of a write-off: a statutory write-off and a repairable write-off.
- Statutory write-off: a car that is too badly damaged to be repaired to a standard that is considered safe for road use. These vehicles are suitable only for use as parts or scrap metal.
- Repairable write-off: a car that technically can be repaired, but it is decided it would be uneconomical to do so. This usually occurs when the cost of repairing the car is higher than its market value.
This damage could have been caused by either a person, another car or an act of nature like a storm or flood. If you have new-for-old replacement cover (also known as a new car in case of write-off) and your car is written-off, you may be eligible to receive a replacement car from your insurer – either one of the same model or of the same market value.
The following table displays a snapshot of car insurance policies on Canstar’s database that offer a new car in case of write-off, with links to providers’ websites. These results have been sorted by provider name (alphabetically) and are based on a male driver aged 30-39 in NSW with no cover for an extra driver under 25.
Will your insurer cover a written-off car?
This will depend on your policy and the terms and conditions listed in the product disclosure statement (PDS). When your car has been written off, your insurer will assess the damage, as well as look at its listed value, its condition before the accident and the distance on the odometer (we’ll delve more into how they determine a write-off later).
If the insurer deems that your car is a write-off and you are eligible under your insurance policy, then they may offer you a payout. This payout may be lower than what you might have been expecting, as they will take the following factors into account:
- Your excess
- Your remaining premiums
- The unused portion of your registration and CTP insurance
The excess payable on each claim is a compulsory feature of car insurance, and in the event of a claim, it will usually be deducted from your insurance payout. How much of an excess you pay will depend on your policy and whether or not you agreed to pay a higher excess to reduce your premiums.
Read here for more information about car insurance excess provisions.
Your remaining premiums
Even if you pay your insurance premiums monthly, you’ve still agreed to pay a year’s worth to your insurer under your contract. In the event of a total loss claim, the insurer will likely deduct from your payout any unpaid premiums outstanding between the time of the claim and the next policy anniversary (12 months from the time the policy was started or last renewed).
Your unused registration and CTP insurance
When determining the market value of your car, insurers will often include your registration and compulsory third party (CTP) insurance as a part of this value. They then might deduct the remaining value of your unused CTP from your CTP insurer and get a refund for your unused registration from your state’s Department of Transport.
Learn more about CTP insurance here.
For example, if your car had a market value of $10,000 and it was written-off after you drove it into a pond, after taking your excess, remaining premiums, registration and CTP insurance costs, you might only get around $6,000 back from your insurer.
How does your insurer determine if your car is a write-off?
For a car to be added to your state or territory’s written-off vehicle register, it must be deemed a write-off by your insurer. If your car is significantly damaged and you choose to make a claim, then your insurance company may choose to send an assessor to inspect the damage (this will be set out in your terms and conditions). Along with the physical damage, they’ll examine:
- The car’s listed value against other models
- The condition of the car pre-accident (make you keep lots of photos!)
- The distance on the odometer
Making a decision to write-off the vehicle can be fairly straight-forward if the damage is not repairable. It can be a little more complex if the vehicle isn’t a statutory write-off and can be repaired, but the cost of doing so would be more than its market value or sum insured.
If you disagree with your insurer’s decision to write-off your vehicle, you’ll usually have a time-frame of one week to dispute the decision. You should provide some evidence to support your belief that the vehicle can be repaired and that the cost of the repairs or salvage value is less than the market value or sum insured. If you are still unhappy with the outcome, you may be able to make a complaint under your insurer’s internal dispute resolution process.