Ever heard a friend talking about his car getting classified as a “write-off” or a total loss? Read this blog to know what happens to cars that get written-off
You probably heard a friend or a colleague talking about an accident they or one of their acquaintances underwent, after which one or both vehicles were classified as insurance write-offs. And you probably heard that the insurer paid them a cash amount against their vehicle. How is that feasible? you might wonder. Allow us to shed some light on this matter.
What does an insurance “Write-off” mean?
An insurance write-off is a term referring to vehicles that have been deemed by insurers unsafe to go back on the road or unworthy of fixing or repairing in a financial sense. Put simply, it is more economically efficient for insurers to provide owners with a cash payout in respect of their vehicle than paying to fix it. This process is also known as totalling, and cars getting written-off might be labelled as total loss vehicles.
How does an insurer decide to write-off a vehicle?
Each insurance provider has its own set of guidelines or requirements for classifying a vehicle as a write-off. Whilst generally write-off is more common in major accidents where a car is greatly damaged beyond repair or to the point that it wouldn’t be safe to drive even after the required repairs, it is also an option in other minor accident scenarios where due to the age of the vehicle, the cost of repairing the vehicle outweighs its value.
How will I be compensated if my vehicle was written-off?
When a car is deemed as an insurance “write-off”, the insurance provider will usually offer the owner of the vehicle a sum amount of cash as compensation. Of course, this amount is determined after taking into account different factors like the car age, make and model, mileage, and so on. Some of these factors will also determine the amount to be deducted in respect of depreciation: that is to say, a percentage of the insured value of the car that will be deducted in line with the market value of the vehicle.
If you are not sure what the insured value of your car is, find out how you can figure that out with our previous blog: How do I check the insured vehicle value under my car insurance policy?
In some cases, and depending on each insurance policy, if the car is brand new or less than one year old, the insurer may pay for a replacement car of the same make and model.
What happens to the car after it’s classified as an insurance write off?
After a vehicle is classified as an insurance write-off and the owner of the vehicle accepts the settlement offer and receives his cash payout, the insurance provider has the freedom to determine whether the crash will be sold to a scrap yard to be crushed or sold for a salvaging agent that would put some of the unaffected parts for resale.
In some markets, some salvaging companies buy these cars and rebuild them and sell them back. However, since may 1st of 2017, the UAE has imposed a ban on import of used cars with major faults. This puts the minds of many UAE motorists at ease knowing that their vehicle hasn’t had a “bad past”.
To know more about insurance write-off, or if you want to know if the offer you have from your insurer against your written-off vehicle is fair, reach out to our insurance advisors at InsuranceMarket.ae, they will be delighted to help!