What does it mean if your car is a write-off?

You’ve probably heard the term “write-off” in relation to car insurance before. But unless your car has been awarded that unfortunate title, you might not know exactly what the classification means.  

Basically, your car can be written-off after an accident or damages if it’s deemed irreparable and unsafe to drive, or uneconomical to repair. If you have cover which includes a pay-out or replacement after a write-off, you may receive a sum from your car insurance company up to the agreed or market value of the car, or a new comparable vehicle.

If you only have third party property car insurance or are not covered beyond Compulsory Third Party (CTP) insurance, this might not be an option. But if your wheels are deemed a write-off, you may be able to salvage some cash by selling functional parts or the whole lot for scrap.

Who decides if your car is a write-off? 

That’d be your insurance company. The specific classifications around vehicle write-offs differ slightly between Australian states and territories. However, insurance providers are the ones labeling vehicles as official write-offs across all areas.

If you are uninsured, the insurance company of an at-fault driver involved in the incident may classify your vehicle as written-off and cover it accordingly (depending on the type of car insurance the at-fault driver has).

A written-off car will end up in one of two camps:

• Statutory write-offs: This is the end game. Statutory write-offs are deemed irreparable, normally due to structural or other extensive damage, and you won’t ever be able to re-register the vehicle. Any usable materials or parts can still be sold for scrap, though.
• Repairable write-offs: You could feasibly fix this kind of damaged car but the provider has assessed that repairs would cost more than the car’s market value. These kinds of write-offs can be sold on and then re-registered if repaired to the correct standards. 
  

Once officially classified, your car will be put on the Written Off Vehicle Register (WOVR).

Can you dispute a car insurance write-off?

In the case of a repairable write-off – the kind where the insurance company decides it’s uneconomical to fix the damages – this is possible. But you’ll have to move quickly, as once the car is placed on the WOVR it’ll be hard to have the assessment changed and the processing time is usually one week.

If you are trying to get your provider to cover the cost of repairs, you’ll need to prove the ‘salvage and repair’ costs are less than the market value (and sum insured) of the vehicle. If the damage has been categorised as “non-repairable” you’ll have a hard time disputing the WOV title.

How much do you get back from a totalled car?

This is dependent on your insurance policy, but it’s likely going to be less than you imagined, as it’s not a simple payment of the value of the car. The amount can be impacted by:

Your excess: This is an amount you’ll have to pay before your insurance kicks in. This could be anywhere from around $500 to $3,000 depending on factors like the value of your car and who was driving it at the time of the insurable incident (if it was a young, unlisted driver, the excess may skyrocket).

Make sure you keep track of your excess and the value of your car to ensure depreciation doesn’t make an insurance claim uneconomical once the excess is paid. 

Remaining premiums: Even if you pay monthly, you’ll still have to cover any remaining instalments of your car insurance premium. Insurance companies will often deduct the remainder of your annual premium from your payout.

Unused registration and CTP: You will have either signed up to an agreed value policy (where you negotiate on a set value that’ll be covered in a write-off scenario) or market value cover, which is based on the sale price of a car of similar make, age, condition and odometer reading at the time of the claim. 

When assessing market value, your CTP and registration may be included in the equation. If this is the case, it’s remaining value at the time of the claim may be deducted from your pay-out. 

What if I still owe money on my vehicle when it’s written off?

If you took out a car loan to purchase your wheels, this debt doesn’t disappear along with your written-off vehicle. Hopefully you’ve insured the car to match its worth and you score a new-for-old replacement vehicle, or get a decent pay-out which you could use to keep paying down the loan while you figure out new transport.

Whatever the situation, it’s important to get in contact with your lender as soon as you have the final word from the insurance company to discuss your options. Many financial institutions have hardship policies in place if you’re struggling to cover repayments.

Head to Mozo’s car insurance comparison page to assess policies and ensure you’ve got competitive cover in case your car is written-off.