The Process For Writing Off A Vehicle

A car is declared a total loss when the estimated repair cost is greater than the present market value of a similar car. Once the insurance company decides that the car is a write off then they begin the process described here.
1) The wreck will have been moved from the vehicle repair shop to a salvage yard. This is done to save storage costs charged by vehicle repair shops for vehicles on their property.
2) They will ask you for the vehicle documents. That is the service records,V5 registration document, purchase receipts, keys, MOT certificate if your car requires one and details of any outstanding finance. They will ask that you return your certificate of insurance. They will need the original paperwork before they will be able to settle your claim. Copies will be ok to start with but will slow down the claim process.
If you enquire of the insurance company why they want all of this paperwork, they will likely tell you that they need to check that they have the correct model of the car, that it possessed a valid MOT certificate and proof of service record to establish that is has been maintained. These are all valid reasons. But they also need to check out your claim for fraud. Official documents have several anti-fraud measures designed by the issuing Government agency. A careful check on the originals will enable the person checking the claim to establish quickly that these are indeed genuine documents and not fake. If there is doubt, they will use forensic science equipment to validate that the documents are genuine or fake. You would have to be a very shrewd fraudster to successfully forge this whole collection of documents. My advice is – let the company have the original paperwork as soon as they request them. Your claim will be delayed if you send copies.
3) Whilst you are waiting for your settlement proposals, 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 recorded all insurance written off vehicles and stolen vehicles since the early 1980’s. It checks your vehicle’s details against the contents of the database to see if it has ever been the subject of an insurance total loss before, or whether it has been previously stolen and not recovered. It checks against your name and address; post code; your vehicle’s registration number and VIN (vehicle identification number). If there is a match further questions will be directed towards you, and your insurer might go into ‘fraud investigation’ mode.
The motor insurance anti fraud and theft register also automatically checks your car against the Hire Purchase Information (HPI) database. If you borrowed money to buy it and you still owe money, it will be on this database. Without doubt your insurance company will find it. So be honest and tell them about your finance. The finance company is the rightful owner of your car. Any settlement must be made to them until the loan is paid off. Anything left over goes to you. Your claim will also be noted on the Claims & Underwriting Exchange (CUE). This is done automatically on all motor and home insurance claims. Not all insurers subscribe but most of them do.
Problems can arise where the outstanding loan is greater than the worth of the car. In this case the insurance company does not completely pay off the loan. I remember a purchase plan for motorcycles. Young people went into a dealer, bought a new motor cycle plus all the leathers, helmets etc with finance against the value of the bike. The interest on the loan was outrageously high. Some 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 lot of upset which was blamed on the insurance company and not the stupidity of the youngster for entering into such a bad deal with the shop.
4) Your insurance company will be getting bids for the salvage. The higher the salvage value the less the final cost of your claim. There has been much comment about vehicles which have been declared a total loss reappearing on the road, or being purchased by criminal gangs to help them disguise a stolen vehicle. The Association of British Insurers (ABI) have come up with rules relating to the disposal of vehicle salvage. All insurance companies adhere to this code. The result is that the majority of salvage is sold by the companies to reputable salvage dealers. If the vehicle is damaged to an extent that meets certain criteria, it will be issued with a code that makes it illegal to repair the car and return it to the road. Vehicles with less damage could still be fixed and returned to the road.
5) Once all these hurdles have been overcome your insurance company will propose a settlement figure to you.
Their assessor will have referenced 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 starting point of the settlement figure given to you. An excess might have to be deducted along with any finance still outstanding on the vehicle.
Your insurance company should make it clear to you precisely how much you will receive and explain any adjustments to you. If you pay your motor 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 companies might require your signature to a document called a ‘form of discharge’) you will be sent a cheque.
7) Your insurance company now own the remains of your car and, subject to legal limitations and the ABI rules, can do whatever they want with it. This will inevitably mean they will sell the salvage.