A car write-off is when your insurer deems your vehicle has been damaged so severely that – not only is it unsafe to drive – but it is also too expensive or impractical to repair.
A write-off can occur after a crash, a fire or storm, or in any number of circumstances.
Depending on the type of cover your hold (e.g. Third Party Fire and Theft or comprehensive policies) and how the car is damaged, you will be compensated by your insurer if your car is written off. For example, Third Party Fire and Theft will cover a car destroyed in a fire, but not if it was written off in a collision.
The amount you receive will depend on the amount it was insured for when you took out your policy, which is typically the car’s market value..
You can take your car to the assessor or have the insurer arrange to have your vehicle delivered to an assessor. The assessor will analyse the damage and categorise it based on the incident, the damaged areas of the car, the type of damage and the severity. The assessor then determines what to do next, including whether it’s fixable, a statutory write-off or repairable write-off.
Repairable write-offs cost more to fix than the car is worth. This means that, if your insurance covers the type of incident which caused the car to be written off, your insurer will only pay you up to the vehicle’s market value or an agreed value from before the time the accident occurred.
In addition, a car that’s written off is added to a written-off vehicle register. Assuming it can be repaired and it passes safety inspections, it could then be reinsured or sold. However, it may have lost much of its value.
If you choose to fix your car, you will have to pay the rest of the cost out of your own wallet. It may be more economical to simply purchase a new car than attempt to fix one that is so badly damaged. If the insurer deems the car a write-off and they pay your claim, the insurer takes possession of salvage unless your policy states you can claim the salvage, though this is more common to vintage and classic car insurance policies.
In some circumstances, a repairable write-off can be driven again and insured, though some insurance companies may not cover that vehicle. Firstly, you’ll need to re-register the vehicle, as registration is cancelled once the car is written off. Each Australian state and territory has specific rules regarding whether a repaired write-off can be re-registered.
For example, the NSW Government only allows a repaired write-off to be re-registered if all damage is repairable, and the car was:
Check with your state government for details on re-registering written-off cars. You may need to apply to have it registered, and the car will have to pass inspections and safety checks.
Remember, most insurance companies won’t provide cover for a repaired write-off. If they do, the price of your insurance premiums will typically be higher than a regular car of the same make and model, or you may have limited coverage compared to another vehicle of the same age and model, due to your car’s history as a write-off.
In the event you had finance on a car that is wrecked and written off as a total loss, your insurance company will pay you a sum if the incident that caused the damage is covered in your policy. You can use this money to pay out your lender.
If the type of incident wasn’t listed in your policy, you still need to pay out your loan. If it was secured loan, the lender may repossess the vehicle and attempt to sell it for scrap, but you may still have an amount owing.
Likewise, if you purchase a car – regardless of whether it’s a write-off or not – it’s crucial to check if there’s an outstanding loan on the vehicle, as the lender could repossess the car if it was a secured loan. This applies to re-registered write-offs that were repaired, too.
You can check this by performing a Register of Encumbered Vehicles (REVs) check. This will let you know if a vehicle you plan on purchasing still has an outstanding loan.
The market value of your car is calculated by finding the average price of the same make and model in a similar condition across sale yards. The condition of your vehicle before the accident also plays a part, as well as the odometer reading. Any unused registration or Compulsory Third Party (CTP)/Green Slip insurance can be a factor as well.
Should your car be written off, it depends on the incident as to whether this will affect your insurance in the future. If you were deemed at fault, this will go on your driving history and will likely increase the cost of insurance next time you take out a policy.
If you attempt to insure a repaired write-off, the accident that damaged your vehicle will play a part in your premium calculations. Due to the vehicle’s history and condition, you will likely have to pay more on your insurance.
You may be able to salvage the parts from a written-off car if your vehicle is totalled. Normally, your insurance company will sell the wreck as scrap, but you can ask them to let you keep it. If they agree to give you the scrap, you will have the value of the parts reduced from your payout.
Vintage car insurance policies typically include salvage rights as standard, due to the rare nature of the vehicle. With other car insurance policies, it will be up to the insurer.
1 Written-off vehicles. Roads and Maritime Services, Department of Transport, New South Wales Government. 2019.