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Insurance write off - Help to understand the process?


#1

My car is severely damaged and am told it be a write off! What is the process, who makes the decisions, who owns what, etc.

I assume I still own the wreck of a car at present It is at the assessors, they have estimated the repair cost and implied it will too expensive to repair. It seems now that the insurer now has total control of the situation. They seem to be able to do what they like, when they like, and I have have to accept the outcome? So, even things like me retaining my plates, is under their control not mine, when the wreck goes to the wreckers auction, what it is sold for, and presumably they benefit from that sale not me.


#2

Once your car has been written off it cannot be re registered . It would be classed as an illegal rebirth if it was registered again . The link below may help you .


#3

From what I understand via someone who recently had a very bad experience, you need to be very clear with your insurance company that you are not making a claim and that you do not commit to any decision before you know what the details are - someone can possibly give more specifics on this, but I got the impression once a claim is made, you are out of control …


#4

The usual process is that if the cost of repairs equals or exceeds the insured value they write it off. If your policy was ‘market value’ it is probably quite a bit under expectation. ‘Market value’ is essentially what a dealer would pay for your car, not what a private buyer might pay. That value is negotiable if you can demonstrate an above average vehicle that would demand more on the market.

The process for your insurance company should be described in your policy PDS. The common T&C are that you pay your deductible, they pay the difference to the insured value, and they own the vehicle and usually the remaining rego. The policy is then cancelled so you then get to start a new policy.


#5

In Queensland, there are a number of write off classes. See

https://www.tmr.qld.gov.au/Registration/Registering-vehicles/Written-off-vehicles/Written-off-vehicle-register.aspx

Where a car/vehicle is uneconomical to repair, such as with severe hail damage, it can be classes as a repairable write off. I understand that repairable write off can mean a car is structually sound but could be repaired, but the costs of repair exceed the value of the car.

Assumming the car is fully/comprehensively insured, usually the insurance companies assessors make such decisions and advise such to the relevant registrating agency, who unregister the car. The car in effect is handed over to the insurance company who then decides what happens to it…auctioned off for repair/parts or scrapped. The insurance company pays the value (market or agreed) to the owner, less the excess.

The car can only be registered when it is repaired and goes through a vehicle inspection process.

Often panel beaters buy such cars and work on them when their business is quiet…to allow some income from times when cash flow may be otherwise low.

The other category usually means that the car can’t be safely repaired and can’t be rebirthed.


#6

The insurance company makes the decision if you’re relying on an insurance payout but they apparently aren’t obliged to pay you a thing. The car still belongs to you.
If the insurance company takes control they should handle it all otherwise you’re supposed to contact the roads authority in your State and inform them your car has been written off. However if you then decide to repair it you have to go through a whole bunch of hoops to get it back on the road again.


#7

@longinthetooth, sorry to hear about the insurance issues. The link @vax2000 posted above has a good explanation between the difference between a ‘statuatory write-off’ and a ‘repairable write-off’, which I think is important to your situation. If you make a claim and receive a payout, it’s fairly common that the insurer takes ownership of the wrecked car, but it’s not always the case.

Shannons car insurance for example offers salvage rights, which either allow you to retain ownership or have the first opporunity to purchase the written-off vehicle. You could see how this would be an important factor to those with custom or classic vehicles.

From the Shannons website:

It sounds like your insurer needs to explain the situation a bit better for you in terms of how they are making the decisions and the salvage rights you have (if any). Don’t forget you can always try to negitiate with them to get the outcome you want. Good luck with it all.


#8

We have a good friend that had his hail damaged car assessed and the insurance company wanted to flag it as a repairable write off. The car was safe, otherwise sound (no rust or sun perished items) and in good mechanical order. It just looked like a gold ball.

He contacted his insurer (can’t remember the company’s name) about other options. They indicated that he could cancel the insurance policy, obtain a damage settlement on cancelling and then retain the vehicle for his own use. The vehicle would still be registered as there was nothing which would make it roadworthy. They also advised that he would not be able to get comprehensive insurance on the vehicle possibly by any insurer, including themselves.

The pre-hail damaged vehicle was insured for about $8000 (as it was about a decade old), and the insurance company said it was willing to payout the claim and cancel the policy for about $2000…which gives an implied vehicle value of $6000. He then took the Discovery to a car dealer and asked how much for a trade The dealer said because of the hail damage, it was only worth its scrap value of a few hundred dollars.

He didn’t really want to get rid of the Discovery as it has been a good vehicle to him, but based on the above economics, it was not in his financial interests to keep the vehicle. He worried that in a year to two he may have to replace the vehicle and find he would be up for the whole of the cost of the replacement vehicle (less $2000 for the agreed settlement), rather the replacement vehicle cost being $7500 less ($8000 less the excess of $500). He ended up accepting the $7500 for the vehicle being a repairable write off and bought another car.

I suppose if one thinks about another option other than writing the vehicle off and receiving payout for the vehicles value, one must know the risks, especially additional costs which may accrue in the future.


#9

I had a vehicle stolen and written off a longa longa time ago. I was asked if I wanted to keep the registration plates. I think that if I did, the insurance company would have deducted the value of the rego from the payout.

I was told I could take out all our possession that were left in the vehicle. So all that had to remain with the vehicle was what had been there when it was bought minus any declared modifications etc.

This may not be the same now, or with your insurer, but it’s worth asking.


#10

How do I prevent the insurance company from putting my car on the WOVR

I am not at fault. The other party is at fault and has insurance.

The accident was in QLD.

Smash repair quotes

I have 2 quotes of $5k for smash repairs.

Market value quote

The car according to Red Book is worth (private price guide) $3,700 to $5,300 for 165,000km to 275,000km. The car has done 130,000km so should be at the high end of the value. However Gumtree has prices (both dealer and private) ranging from $6,500 to $7,800. Assume sale price is 90% of asking price that’s $5850 to $7020.

Salvage Value Quote

I’ve got 2 salvage value quotes of $200 and $400.

Questions

Is market value based on private price guide or dealer trade in price?

As you can see from the above there’s a real risk that the repair cost will outweigh the market value as market value is a matter of opinion.

According to the insurance law general advice link above

If your car is at risk of being written off because the repair cost may exceed the market value of your car, you should not let the insurer assess your car if you do not want your car on the WOVR as written off.

Instead you should send a letter of demand to the insurer with the repair bill. If the repair bill exceeds the market value of your car, the insurer can pay you the market value instead. You would then need to contribute any additional costs to repair the car if you wanted to repair the car.

However that is being difficult. If I do let them assess (Zurich Insurance in this case) do they notify me that they are about to put it on WOVR and do I get a chance to dispute market value? I read somewhere you have 7 days to dispute internally but that varies from insurance company to insurance company.

I rang up Department of Transport and Mains Road WOVR section and they couldn’t give me an answer.

Advice?


#11

From Canstar: Car insurance market value is a recognised industry term for what your car would fetch on the open market, as is. It is not, say, the trade-in value, nor what an unusual purchaser, such as a collector, would pay for your car. It’s not the cost of replacing your existing car with a brand new one.

So if you insure your car for market value, the price you will receive from the insurer in the event that your car is written off will be the price that your insurer estimates your car was worth just before the accident.

From experience it could be so high as close to the average of what you see cars in similar condition advertised for, and could be as low as what a dealer would buy it from you outright in the case of low volume cars where not many if any are often sold.

In general allowing an assessment does not abrogate your rights to negotiate. Since you are concerned about that you might ask Zurich for that in writing. Having their position in writing is a better position than any advice from any other source because they might not agree with that advice even if it comes from a government agency - think angst getting through the process where even if you ‘win’ you ‘lose’ in other ways.

Regardless, if your vehicle is worth (say) $6,000 in your opinion, and they offer you $5,000, and you take the $5,000 less the $400 salvage value ($4,600 in pocket) and get it repaired, what are the odds it will be fixed to your satisfaction vs have some latent problems (hidden damages and so on) you would have to personally wear in the near future? Sometimes reflecting on realities helps advise decisions.

Good luck with it. We recently had a no-win experience where our choices were to write off a 20 year old car or hire a solicitor because the circumstances were such the at-fault party guessed we would not take a $1,500 damage claim to court, noting accidents are often exceptions to consumer affairs and tribunal assistance.


#12

The other thing to consider is that if they do pay you out the market value the terms of your contract/offer may mean they take possession of the vehicle and it won’t then be your vehicle so whether or not they put it on the register will be of little matter to you.

As @TheBBG said above there is a lot to consider if you take the payout and sometimes the money rather than the after problems, is the best outcome even if it is a poor one to what you would really like. Certainly negotiating a possible better value outcome is worth a try, the WOVR outcome though is harder to dispute as it could be “written off” as a repairable and is able to be repaired & re-registered.

From the PPSR site is this in regards to repairable write offs “A vehicle is considered a repairable write-off if it has been assessed as being too costly to repair, but subject to state laws may be re-registered for road use if it has passed a vehicle safety and identity check”. If written off in this case you may be able to also retain the vehicle or pay some amount to purchase it from the Insurance and undertake the repairs at your cost, again will it be worth the risks and the costs?


#13

Our elder daughter had a Mazda CX9 which was badly damaged by a hail storm in Brisbane around 2012.

When she contacted the insurer, the woman said that it could not be safely repaired as replacing the roof would affect the structural integrity, so the vehicle would be replaced.

When the insured later realised that our daughter had an agreed value policy and not a market value policy, they suddenly claimed that the roof could be safely replaced which is what they did.

Never let the truth get in the way of a good story. What a two-faced bunch of bottom-feeding grubs.


#14

Firstly thank you everyone for your quite detailed advice. It’s very much appreciated. IF you could let me know if your experience or advice applies to Queenslander’s that’d be great as well since state laws are different. I got personalized advice from Insurance Law above but they couldn’t advise about WOVR and laws around it as it is state specific.

There is no guarantee that taking the cash and buying another second hand car won’t have exactly the same problems. The accident while costly in repairs was not serious except for the fact that the boot won’t close properly without pushing on certain points and slamming it shut. There is some damage to the inside panels but it’s minor. It’s better the devil you know.

I guess in my demand I’ll ask for 5% more in case of internal damages. I actually have a lower quote as well. All quotes are Google 4+ star 15+ reviews with few paragraphs of text for each review. They are reputable.

I’m not exactly sure what you mean by this. Could you please elaborate? Do you mean that consumer affairs are very often not helpful for car accidents?

That is exactly why I don’t want it to be assessed. To repair it after being put on WOVR I will need another inspection and road worthy certificate costing a combined total of roughly $500 and resale value will be affected as it is listed on the car history.

To dispute the WOVR I guess I’d need an independent valuation which would cost me $400 again but at least it won’t be on the WOVR.

Once again thank you everyone for your advice and experience. It’s very much appreciated.


#15

Gumtree is only advertising aspirational pricing. That is, what people HOPE to get for their vehicles. It is only a starting point, and not what they will necessarily get.

The automotive industry use Red Book and Glass to value vehicles. Unless you have listed optional extras in your policy, the best you can hope for is up toward $5,300.

Your insurer may argue that your car is only worth $5,000. Then they will say it is technically a write off, and likely refuse to pay out for the $5,000 repairs. Sometimes they are unwilling to sell it to you as they have paid it out. It depends and you would need to ask if this is an option.

It’s a tough call as has been outlined about whether you accept the payout or not. Are you that confident in your car and the repairer that make it worth keeping? Also consider the resale value of your car after repairs. Buyers will usually ask if it has been in any accidents especially with shiny new panels, and when you say yes, the resale value you can achieve will immediately drop.

Sometimes it’s better to fall in love with a new (to you) vehicle.


#16

We are Qld’ers and I can say from 2 experiences with this kind of matter that sometimes the offer will be based on them getting possession of the vehicle for the payout (which you can refuse of course). If you refuse the terms I guess you may then need to go to QCAT and/or the FOS to get an outcome that you are happy with. We didn’t bother to do so as we were happy with the payment outcomes. One of our 2 was repaired but the other was a real write off so we happily surrendered it for the payout.

I can’t comment about WOVR in either regard as one was a repair without a write off and as I said the other was a definite write off as we had to be cut out of the vehicle.

If you are insured it may be a better plan to go through your insurer to seek their help which may mean your vehicle is repaired and all the fighting is done by the insurance company/companies legal team/s. This may still lead to an unhappy outcome but you certainly can test the water.


#17

What I mean is vehicle accidents and subsequent insurance issues are out of scope for many of the agencies / ombudsmen / tribunals. As you noted each state is different, so check QCAT’s ins and outs prior to spending time that might not be well spent.