What happens if your car is written off?

ALASDAIR DUNCAN
If you have been involved in an accident on the road and your car is seriously damaged, it may be the case that your insurer writes it off.

Sometimes after an accident, a car will be repairable, but this is not always the case. The vehicle in question may be damaged beyond repair, or an insurer may decide that 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 will receive some form of payout. In this article, we’ll answer the questions:

What does it mean when a car is written off?

When a car is written off by an insurer, this means that it has 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 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 has been damaged so badly that 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 for 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 have accepted your insurer’s decision to write your car off 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 a 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 this payout will be determined by the car’s market value or agreed value. Agreed value is a sum that has been fixed after discussions between 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 has travelled, and its service and accident history.

Whether you are 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 are 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 that you will 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 while it is not ‘bad’ to write a car off, there can be potential implications for your future insurance premiums. Your driving and claims history can affect how much you are 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?

Yes, if you wish to keep a car after it has 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 will still receive the sum for which it was insured, minus any salvage value that 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 have 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 is possible to re-register a repairable write-off; however, the rules vary on a state-by-state basis, and are stricter in some places than others. State-by-state, the current rules are as follows:

 

  • Australian Capital Territory
  • New South Wales
  • Northern Territory
  • Queensland
  • South Australia
  • Tasmania
  • Victoria
  • Western Australia

Australian Capital Territory

Access Canberra states that 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 states that a written-off vehicle can be re-registered only if it has no non-repairable damage, and fits into one of three exemption categories: hail-damaged vehicles where you were the registered operator for more than 28 days before the damage occurred, vehicles that you inherited from a will or letters of administration or vehicles that were registered in your name for at least 28 days before the damage occurred.

Northern Territory

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

Queensland

Queensland Government regulations state that 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 state that an economic repairable write-off can be re-registered after it is repaired in accordance with the manufacturer’s standards, its identity has been verified, and it has passed a roadworthy inspection.

Tasmania

Transport Services states that a repairable write-off can be re-registered subject to a three-tiered inspection process, consisting of 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 states that to register a written-off vehicle, you must obtain a Certificate of Roadworthiness and a Victorian Vehicle Identity Validation (VIV).

Western Australia

Transport WA states that a repairable written-off vehicle can be re-registered after it has been inspected by an authorised written off inspection service provider and undergone an identity and roadworthy inspection.

Can you buy a repairable write-off car?

It is possible to purchase a repairable write-off car, but Motorama warns that the only real advantage of doing this is that you might get a cheaper price than another kind of vehicle, and that the negatives generally tend to outweigh the positives.