UK Motor Insurance - What Is The Process For Writing Off A Vehicle

A car is declared a total loss when the cost of repairing it is greater than the current valuation of a similar car. Once the insurance company decides that the car is a write off then they begin the process detailed below.

1) The car will have been moved from the repairers to a salvage yard. This is done to reduce storage costs charged by vehicle repair shops for vehicles on their property.

2) The insurers will ask you for the vehicle documents. That is the MOT certificate if your car requires one, service records, purchase receipts,V5 registration document, keys and details of any outstanding finance. They will ask for your Certificate of Insurance to be returned. They will need the original documents before they will be able to settle your claim. Copies to start with will suffice but will delay the process.

If you ask the insurance company why they require these documents, they will probably tell you they want to ensure they have the correct model of the car, that it possessed a valid MOT and some sort of a service history to establish that is has been maintained. These are all appropriate reasons. But the insurers also want to check out your claim for fraud. Official documents have several anti-fraud measures designed by the issuing Government department. Careful perusal of the originals will help the claims official to establish quickly that these are indeed genuine documents and not fake. If there is any doubt, they will use forensic science equipment to prove that the documents are genuine or fake. You would have to be a very clever forger to forge successfully this whole collection of documents. I would suggest that you let the company have the original documents as soon as they request them. Your claim will be delayed if you send copies.

3) Whilst you are waiting for your settlement details, your insurance company will be doing further checks as well. They will record the claim on the 'motor insurance anti fraud and theft register'. (MIAFTR) This is a national data base that has been recording all insurance total loss vehicles and stolen cars since the early 1980's. It checks your vehicle's details against all the information in the database to see if it has ever been written off before, or whether it has ever been stolen and not found. It checks against your name and address; post code; your car's registration number and VIN (vehicle identification number). If any details match further questions will be directed towards you, and your insurer might enter 'fraud investigation' mode.

MIAFTR also as a matter of course checks your vehicle against the HPI (Hire Purchase Information) database. If you used a finance company to buy the car and you still owe money, it will be on this database. Rest assured that your insurer will find it. So be honest and tell them about your outstanding balance. The finance company is the rightful owner of your vehicle. Any settlement must be made to them until the loan is paid off. Anything left over goes to you. Similarly, your claim will be noted on CUE (Claims and Underwriting Exchange). This is done as a matter of course on all motor and household claims. Not all insurance companies subscribe but most of them do.

Problems occur where the outstanding loan is greater than the worth of the car. In this situation the insurance policy does not pay off the loan in full. I recall a scheme for motor bikes. Youngsters went into a dealer, bought a new motorcycle plus all the leathers, helmets and so on with finance against the value of the bike. The interest on the loan was outrageously high. A short time later they would have an accident and they would total loss it (or it was stolen). The value of the motor cycle was much less than the combined purchase price plus the interest. It caused a furor which was blamed on the insurer and not the stupidity of the motorcyclist for entering into such a bad deal with the motorcycle dealer.

4) Your insurer will be obtaining bids for the wreckage. The more they can get, the less they will have to pay out on your claim. There has been a lot of comment about cars which have been declared a total loss reappearing on the road, or being purchased by criminal gangs to aid their disguise of a stolen vehicle. The ABI (Association of British Insurers) have issued rules relating to the disposal of vehicle salvage. All insurance companies adhere to this code. The result is that most salvage is sold by the insurers to reputable salvage dealers. If it is damaged to an extent that meets listed criteria, it will be stamped with a code that makes it illegal to repair the car and return it to the road. Vehicles with less damage could still be repaired and put back on the road.

5) Once all these hurdles have been overcome your insurance company will make a settlement proposal to you.

Their engineer will have consulted the trade publications to value the car, amending these figures for the age, condition and mileage of your car, and his knowledge of the local car market. The final figure that he arrives at forms the basis of the settlement value given to you. Any policy excess will have to be deducted along with any outstanding finance.

Your insurer should make it very clear exactly how much you will receive and detail any adjustments to you. If you pay your car insurance by Direct Debit, the it is likely that any remaining payments will also be deducted from the settlement cheque.

6) Once you have accepted the value (some insurers might need your signature to a document called a 'form of discharge') you will receive a cheque.

7) Your insurance company now own the remains of your vehicle and, subject to legal limitations and the ABI codes, can do what they want with it. This will always mean that they will sell the salvage.

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This article was written by Terry Cod. He has many years of experience working as a claims adjuster with a number of UK motor insurance companies. His website www.instant-online-insurance.co.uk offers online Tesco car insurance with online quotes and secure online payment.

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