Friday 16 November 2018

Write-offs: why it can pay to check cover details . . . and car history

Car write-off
Car write-off

Dorothea Dowling

The manner in which vehicles are written off depends on whether you are claiming under your own policy or are pursuing recovery from the party whom you blame for the accident.

The financial outcome will be different, depending on which category you fall into.

In the context of a claim under your own policy, when you first arranged the cover, you were probably asked what value you put on the vehicle.

That 'sum insured' may be invoked as the limit that your insurer will pay.

However, it is not an 'agreed value' that automatically becomes payable to compensate you for your loss.

You may wish to enquire from your insurer whether you are paying too much premium by having an inflated 'sum insured' that will never be of any benefit to you.

However, any premium rebate is likely to be minimal because so little of the cost of motor insurance relates to the value of policyholder's own vehicle (See Irish Independent Motoring Supplement September 5, 2018 - 'Revealed: where every cent of your vehicle's insurance premium goes').

The starting point for vehicle damage claims is the pre-accident value (PAV).

This is basically the market price.

That can be influenced by individual features such as low or high mileage and by any extras fitted to the vehicle.

Under the standard motor policy, the PAV is all your own insurer will pay out if your vehicle is written off.

If you are claiming against a third party who was responsible for the damage, you may also be entitled to the cost of car hire for the period of repair and depreciation to reflect the fact that crash damage reduces the value of your vehicle.

Obviously, not all vehicles are repairable.

If a crash caused structural damage to the extent that it is impossible to repair it safely, or there are only some usable spare' parts left, then the vehicle must be destroyed by an authorised treatment facility.

Years ago, some of those dangerous vehicles were returned to the road.

Theoretically, that should not happen now.

Insurers are obliged to register these end of life vehicles with the Department of Transport on the National Vehicle and Driver Files.

If we regard these as destroyed vehicles, then your own insurer will pay the PAV.

And if you are claiming against the insurer of a third party, you will also be entitled to a short period of car rental to allow you time to find a replacement vehicle.

But vehicles which are not entirely destroyed can also be written off by insurers on economic grounds.

No matter how fond you are of your car, it all comes down to the figures.

While it may be technically possible to undertake a safe repair, the cost of that work may exceed the PAV, which is all your insurer will pay, so the vehicle becomes an economic write-off.

This is even more likely if you are claiming against the third party's insurer because they will also factor in the cost of car hire and the depreciation to which you would be entitled.

That can regularly occur where parts for unusual or imported vehicles might take some time to source, which would result in a long period of car rental.

In that situation, it can be cheaper for the third party's insurer to pay you the PAV plus a short period of car hire.

A vehicle written off on that basis can be repairable salvage, although certification by an engineer is likely to be required before it can be insured again.

Aside from the claims perspective, when you are buying a vehicle, it always advisable to verify that it has not been written off previously, particularly if it is an import.

You can check out the car for a fee on some of the better known car-history websites.

Indo Motoring

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