Written-off car

If you've been in a car accident and your car is seriously damaged, it may be written off by your insurance provider. Rather than getting your car back, you will get an insurance pay-out for the market or agreed value of the car, depending on what you selected when you set up your policy.

Insurers take into account a number of factors when determining how much you will receive should your car be written off. Knowing what they are and what you can do about it crucial and could help you avoid some common mistakes.

It's really annoying, but if your car is written off then you might find that you'll get a smaller payout than you might anticipate. This is because an insurer will pay out your car value, minus the rest of the years premiums and minus an excess.

Car written off meaning

If you are told that your car has been written off, it means it is unsafe or uneconomical to repair and is de-registered. The car's details are entered into the written-off vehicle register in your state or territory. There are two ways in which your car can be written off:

• A statutory write-off: This is when your car will never be safe to drive again, regardless of how much repair work was to go into it. This means it can't be registered again.
• A repairable write-off: This is when the cost of repairs exceeds the sum insured. Ordinarily, your insurer will keep the vehicle and pay you the car's agreed or market value.

What happens when a car is written off by an insurance company?

Once a car has been written off, its details are recorded in the written-off vehicle register. If you choose to accept your insurer's decision, you will receive a payout based on the car's market value. When determining this amount, insurers consider the following:

• Its listed value and other current sales of the same model
• The pre-accident condition of your vehicle
• The distance on the odometer

However, your payout may also be smaller than you would expect because most car insurance policies allow insurers to reduce the amount payable by deducting:

• The excess payable on each claim
• Your car insurance premiums for the rest of the year
• The unused portion of your registration and CTP insurance. You can recover your remaining rego value from your state's roads and transport authority, and your unused CTP from your CTP insurer

If you're unhappy about your car being written off, you have two options:

• If the car is a repairable write-off, you can apply to the roads and transport authority in your state or territory to have the car repaired and re-registered.
• If you think the car can be repaired economically, you can challenge the insurer's decision.

How to check if your car has been written off

If you have recently been involved in an accident and you want to know if your car has been written off, call your insurer and ask them if they have assessed your vehicle yet. Depending on your insurer and the extent of the damage, it may take some time for a mechanic to assess the damage to your car.

You can also use the Written-Off Vehicle Register (WOVR). The register is designed to provide protection for all road users by helping them avoid buying cars that have had substantial repairs, or that have been stolen and illegally rebirthed. Rebirthing occurs when the identifying parts of a wrecked car are transferred to a stolen car, allowing criminals to sell the stolen car with another vehicle's identity.

If my car is written off can I keep it?

Yes. You can make a request to your insurer to allow you to keep a repairable write-off. In this case, you will receive the sum insured less any salvage value. Bear in mind then that you won't receive as much but it may be important to you if the car has some sentimental value.

However, not all repairable write-offs can be legally re-registered. Check with your insurer then before applying to keep a badly damaged vehicle.

Re-registering your car also depends on the state or territory you live in. For example, in Queensland your car can only be re-registered if they've been fully repaired and have passed a Queensland safety inspection and a written-off vehicle inspection.

However, in New South Wales, written-off vehicles cannot be re-registered except in very limited circumstances. To be re-registered in NSW, your car must not have any non-repairable damage, and must also fit into one of the following categories:

• The car was hail damaged, and you were the registered operator for more than 28 days before the damage occurred.
• The vehicle was inherited from a will or letters of administration.
• It was registered in your name for more than 28 days before the damage occurred.

What happens if a financed car is written off?

If there's still finance owing on your car when it is deemed a total loss, the insurer is obligated to pay the financier any outstanding amount. However, in some cases there may be a shortfall between the amount paid out by your insurer and the finance amount owing, which is where motor equity insurance can help. This is designed to pay the financier the outstanding loan amount when your comprehensive car insurer's total loss payout is insufficient to pay out your loan contract.

Can I challenge a write-off?

If the insurer decides that your vehicle is uneconomical to repair and declares it a write-off, you may disagree with the cost quoted to repair your vehicle or your car's salvage value. If this happens you can dispute their assessment, but you only have a very short window in which to do so.

Insurers must notify the written-off vehicle register within seven days of declaring a car a write-off. Once they've notified the register it's usually extremely difficult to get them to change their mind.

If you do decide to challenge a repairable write-off assessment and push for your insurer to repair the car, you'll need to gather evidence that shows the cost of repairs or salvage value are cheaper than the market value of your car. You should gather together the following:

• Quotes from smash repairers to outline how much it will cost to repair the vehicle.
• Quotes from salvage yards that reflect the salvage value of your vehicle.
• Evidence of the market value of your vehicle from a company such as redbook.com.au or glassguide.com.au.

If you provide this information to your insurer straight away and ask them not to report your vehicle to the written-off vehicle register, it may be possible to get the assessment changed. Of course, if you're unhappy with the way you're treated by your insurer you can also complain through its internal dispute resolution service, and then to the Australian Financial Complaints Authority (AFCA) if necessary.

Can a car that has been written off be re-registered?

Yes. If your car is a repairable write-off, that is, it has only been written off because the cost of salvage and repair will exceed its market value, you can apply to have it re-registered.

This option is available in most states and territories, so you’d need to check with the roads and transport authority in your area to find out what you have to do. For example, written-off vehicles in Queensland can only be re-registered if they’ve been fully repaired, and have passed a Queensland safety inspection and a written-off vehicle inspection.

However, in New South Wales, written-off vehicles cannot be re-registered except in very limited circumstances. To be re-registered in NSW, your car must not have any non-repairable damage, and must also fit into one of the following categories:

• The car was hail damaged, and you were the registered operator for more than 28 days before the damage occurred.
• The vehicle was inherited from a will or letters of administration.
• It was registered in your name for more than 28 days before the damage occurred.

Selling a car that has been written off

There is one very big drawback to repairing and re-registering a vehicle that has been written off: its status as a “repaired write-off” will severely hamper its resale value.

The written-off vehicle register is designed to protect consumers and prevent them buying a car that has been written off, and required substantial repairs to get back on the road. If you decide to sell the car in the future, the fact that it is listed on the register as a repaired write-off can have a big impact on how much prospective buyers are willing to pay.

What happens if a financed car is written off?

If there’s still finance owing on your car when it is deemed a total loss, the insurer is obligated to pay the financier any outstanding amount. However, in some cases there may be a shortfall between the amount paid out by your insurer and the finance amount owing, which is where motor equity insurance can help. This is designed to pay the financier the outstanding loan amount when your comprehensive car insurer’s total loss payout is insufficient to pay out your loan contract.

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Alexandra Koster

Alexandra Koster is Finder's Publisher for car, home and pet insurance. Her hobbies include reading product disclosure statements and deciphering complicated insurance lingo to help people save on their insurance so that they can spend their money on better things – like dogs. She has a Bachelor of Arts in Film and Cultural Studies from the University of Sydney.