What happens if your car is written off?

Sometimes after an accident a car will be repairable, but that’s not always the case. The car may be damaged beyond repair, or an insurer may decide the cost of carrying out repairs is worth more than the insured value of the car itself.

In either situation, the car may be written off, meaning that instead of the vehicle being repaired, you may receive some form of insurance payout.

What does it mean when a car is written off?

When a car is written off by an insurer, this means it’s been damaged to the extent that it would either be unsafe to drive ever again, or uneconomical to repair.

A car could be written off for any number of reasons, from severe structural damage due to an accident, damage due to fire, impact or water, or even severe hail and storm damage.

Typically when a car is damaged to this extent, it will fall into one of two categories: a statutory write-off, or a repairable write-off.

Statutory write-off

A statutory write-off is a car that’s been damaged so badly it will never be able to be driven again, irrespective of any repair work that might be carried out.

When a car is deemed to be a statutory write-off, its details will go into the Written-Off Vehicle Register (WORV) of the relevant state or territory, and it will be impossible to register it ever again.

Repairable write-off

A repairable write-off is a car for which repairs would be possible, but the cost of the necessary repairs, along with its salvage value as a written-off vehicle (WOV), would be greater than the sum for which the car is insured or its market value before an accident.

In the case of a repairable write-off, an insurance provider would typically keep the car itself while paying its agreed market value to the holder of the insurance policy.

What happens when a car is written off?

Once you’ve accepted your insurer’s decision to write off your car and its details have been entered in the Written-Off Vehicle Register (WOVR), you will typically receive a payout or a replacement car, depending on your insurance policy.

The WOVR is a list of all vehicles (up to 15 years old and weighing less than 4.5 tonnes) that have been written off, either due to severe damage or because an insurer considers them uneconomical to repair.

If your insurance includes new-for-old replacement cover (otherwise known as new car in case of write-off) and your car is written off, then you may be eligible to receive a replacement car from your insurer. This may be a car of the same model, or the same market or agreed value, depending on your certificate of insurance.

Otherwise, you may receive a payout from your insurer, the amount of which will be determined by your policy.

How much will I get if my car is written off?

The amount of payout if your car is written off will be determined by the car’s market value or agreed value.

Agreed value is a sum that’s been fixed after discussions between you and your insurer, while market value is the amount your car would fetch on the open market, taking into account its listed value and condition before the accident, along with factors such as the age, make and model of the vehicle, how many kilometres it travelled, and its service and accident history.

Whether you’re eligible for a payout will also depend on the type of cover you have. For example, there are some comprehensive car insurance policies on Canstar’s database that cover for accidental damage including hail, storm and flood damage, so this may factor into your decision-making when choosing insurance.

If your car is deemed to be a write-off and you’re eligible for a payout under your insurance policy, then your insurer may offer you a payout, taking into account factors such as your excess, your remaining premiums and the unused portion of your registration and compulsory third party (CTP) insurance, which can lower the final payout amount.

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Your excess

The excess payable on each claim is a compulsory feature of car insurance. In the event you make a claim, your excess will typically be deducted from your insurance payout. The amount of excess will be determined by the type of policy you have, and whether you agreed to a higher excess in exchange for lower premiums.

Your remaining premiums

Car insurance policies typically work on an annual basis, meaning that even if you pay premiums monthly, it’s likely you’ll have agreed to pay a year’s worth of premiums under your contract. In the event your car is written off, your insurer is likely to deduct any unpaid premiums from the time the claim was made until the date when your current 12-month period concludes.

Your unused registration and CTP

Your insurer will likely consider the registration and CTP as part of the market value of your car. In some cases, an insurer may deduct the remaining value of both from your payout, and you will need to organise a refund for your unused CTP from your CTP insurer, and your unused registration from your state or territory’s Department of Main Roads. Your product disclosure statement (PDS) should explain how your insurer treats registration and CTP.

Is it bad to write-off a car?

Car accidents can be an unfortunate reality of life, and as for what happens when you car is written off, there can be an emotional impact on you, as well as potential implications for your future insurance premiums.

Your driving and claims history can affect how much you’re charged by an insurer, and depending on your insurance provider, writing off your car may cause your premiums to increase, even if you were not the driver at fault.

Can you keep a repairable write-off?

If you wish to keep your car after it’s been deemed a repairable write-off, you can make a request to your insurer to do so.

If you choose to keep a repairable write-off, you’ll still receive the sum for which it was insured, minus any salvage value the car might have.

There are a number of reasons you might choose to keep a repairable write-off. You might wish to salvage parts from the car yourself, especially if you’ve made modifications to it and any of these can be salvaged. Likewise, you may want to have the car repaired yourself, if this is possible.

Can you re-register a repairable write-off?

It’s possible to re-register a repairable write-off but the rules vary between states and territories, and are stricter in some places than others. The current rules are as follows:

Australian Capital Territory

Access Canberra says an economic repairable write-off must pass a roadworthy test at the Road Transport Authority or an approved inspection station, and then undergo a vehicle identity inspection prior to registration.

New South Wales

Service NSW says a write-off can be re-registered so long as it’s not a statutory write-off, and meets certain ownership conditions. You also need an Authorisation to Repair, from Transport for NSW (TfNSW), and the vehicle must pass both an Authorised Unregistered Vehicle Inspection Scheme (AUVIS) inspection and an inspection by TfNSW’s Vehicle Identification Inspection Unit (VIIU).

Northern Territory

Northern Territory Government regulations say a repairable write-off can be re-registered once it’s undergone a roadworthy inspection, a vehicle identity inspection and a stolen motor vehicle (SMV) check.

Queensland

Queensland Government regulations says a repairable write-off can be re-registered once it passes a safety certificate inspection and a written-off vehicle inspection.

South Australia

South Australian government regulations say an economic repairable write-off can be re-registered after it’s repaired in accordance with the manufacturer’s standards, its identity has been verified and it’s passed a roadworthy inspection.

Tasmania

Transport Services says a repairable write-off can be re-registered subject to a three-tiered inspection process: a structural inspection at an Approved Motor Body Repair Inspection Station (AMBRIS), a pre-registration inspection at an Approved Inspection Station (AIS) and a transport identification check.

Victoria

Vic Roads says a write off must be repaired in accordance with the manufacturer’s repair instructions. To re-register a write-off, you must get a Certificate of Roadworthiness and a Victorian Vehicle Identity Validation (VIV).

Western Australia

Transport WA says a repairable write-off vehicle can be re-registered after it’s been inspected by an authorised write-off inspection service provider and undergone an identity and roadworthy inspection.

Can you buy a repairable write-off car?

It’s possible to purchase a repairable write-off car, but the car sale dealership group Motorama warns against this.

“Except for the low price, there are simply no advantages,” it says.

The cost of repairing the damage can often be greater than the cost of the vehicle itself, it adds, and a repairable write-off has little to no resale value, and your insurance premiums could be driven up by the fact that the car has been damaged previously.

Is it bad to buy a write-off car?

When buying a secondhand car, the option of a repaired or repairable write-off can be cheaper, but again, there are risks that come with this. This is particularly the case when buying a car that’s been written off due to hail damage.

While hail-damaged cars may be sold at a discounted price by auction houses, buying one of these can come with risks. Repairing hail damage can be expensive, and if left unrepaired, hail damage can eat away at the paintwork of a car, causing rust.

Queensland’s Legal Aid also warns there could be other damage from any hail or storm, such as damage to the car’s electronics.

So while a hail-damaged car may be cheaper to buy, it may be uneconomical in the long term.

What happens if you disagree with a car being written off?

If your insurer decides your car is uneconomical to repair under your policy and is therefore a repairable write-off, you can dispute this decision, but you will only have a narrow window of time in which to do so.

Once an insurer declares a car to be a write-off, it has seven days in which to notify the relevant WOVR, so it’s advisable to gather supporting evidence quickly in order to present your argument.

If possible, you could gather quotes from qualified smash repairers outlining how much they estimate it would cost to repair the car, quotes from salvage yards about its salvage value, and information about your car’s market value from car sales websites.

You may be able to present this information to your insurer before it notifies the WOVR, and convince it to change its decision.

If you’re unable to resolve your dispute with your insurer to your satisfaction, you may be able to take your case to the car insurance ombudsman for resolution.

What happens if your car is written off with finance owing?

If your car is written off with finance owing, you’ll still be responsible for paying off the outstanding car loan or personal loan.

The Financial Rights Legal Centre says if you don’t, then you may be in default of your loan contract.

But it adds that your insurer will be generally required to pay the outstanding amount to your lender.

If there’s a gap between the amount paid out by your insurer and the finance owing on the car, you may be required to pay this amount to your lender. If you have motor equity insurance (MEI), then this may cover the shortfall.

If you’re experiencing any financial hardship, your lender may be willing to negotiate a payment plan for the outstanding amount.

You can contact the Financial Rights Legal Centre’s Insurance Law Service on 1300 663 464 for insurance advice, and the National Debt Helpline for free support with debt problems on 1800 007 007.

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