Explained: the changes to car insurance write-offs

Explained: the changes to car insurance write-offs
Explained: the changes to car insurance write-offs

The way insurers categorise damaged vehicles has changed, aiming to remove uncertainty around written-off cars being put up for sale.

From October 1, the previous categories of C and D have been replaced with two new classifications – S and N. These have been created to reflect the nature rather than commercial cost of the damage.

Categories C and D referred to accident-damaged vehicles that were repairable but where the cost of the repairs was “significant compared to vehicle value” or in excess of the vehicle’s value. This meant insurers would write off the vehicle but traders could chose to repair and resell it, as long as they declared it had previously been written off.

The new categories also apply to vehicles that can be returned to the road.

Category N refers to a vehicle suffering non-structural damage that exceeds its value and category S is applied to vehicles that have suffered structural damage that can be safely repaired.

Any vehicle classified as category S will have its registration document – the V5C – marked with and S and labelled with the text: “This vehicle has been salvaged due to structural damage but following a technical evaluation declared suitable for repair.”

“These steps will not only protect the public further through the additional safeguards preventing unsafe vehicles returning to the road but also help to detect and deter criminal activity”

DAC Graham McNulty

Categories A and B, which refer to vehicles that must not be returned to the road, remain unchanged.

Richard Billyeald, chief technical officer from Thatcham Research, said: “This is about providing clarity to the consumer. The changes have refocussed the process of classifying salvaged vehicles away from financial criteria to a categorisation that provides greater insight into the nature of the damage.”

The changes to the Code of Practice for the Categorisation of Motor Vehicle Salvage also introduce for the first time a minimum qualification requirement for anyone categorising vehicle salvage, in an effort to ensure vehicles are correctly and honestly assessed.

DAC Graham McNulty, National Police Chief Council lead for motor vehicle crime, said: “I welcome the measures taken in the new code with regard to the categorisation of vehicle salvage. These steps will not only protect the public further through the additional safeguards preventing unsafe vehicles returning to the road but also help to detect and deter criminal activity. The codes will provide consumers with further peace of mind regarding the provenance of a vehicle prior to purchase.”

Ben Howarth, senior policy adviser for motor and liability at the Association of British Insurers, added: “Not all insurance ‘write offs’ need to be taken off the road forever and buying one of these cars can be a great way to find a bargain.

“The new Salvage Code should mean there is better information for anyone considering a second hand car, so you know what questions to ask and can buy with confidence. While these changes work their way through the system, make sure you also carry out other background checks on any used car you’re thinking of getting.”

While the changes to the categories filter through to the market, Thatcham Research has offered some advice on how to spot a problem car when buying second-hand:

  • Test drive the car, and take your time looking it over. Watch out for anything suspicious like slightly different colours of paint
  • Use a car history checking service which can uncover problems such as whether the vehicle’s been stolen or has outstanding finance
  • Check for gaps in the service history to see if it’s been properly maintained or not
  • Check the MOT certificate to see when it was last judged roadworthy and whether much work was needed
  • Get an engineer’s check which can more accurately check the car’s condition and any hidden dangers
  • Check online valuations to see what similar vehicles cost to buy and to insure

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