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UK Car Assurance - What Happens When An Insurance Company Decides To Write Off A Vehicle

A vehicle is written off when the cost of repairing it is higher than the present market value of a similar vehicle. Once the insurance company decides that the vehicle is a write off then they take the steps described below.

1) The car will have been transported from the repairers to a salvage yard. This is done to lessen storage costs charged by vehicle repair shops for cars in their compounds.

2) The insurance company will ask you for the vehicle documents. That is the V5 registration document, MOT certificate if your car requires one, keys, service records, purchase receipts and details of any outstanding finance. They will ask that you return your certificate of insurance. They will require the original paperwork before they settle your claim. Photocopies to start with will suffice but will delay the claim process.

If you enquire of them why they want these documents, they will probably tell you they need to check they have the correct model of the car, that it had a valid MOT and proof of service record to make sure that is has been maintained. These are all appropriate reasons. But the insurance company also want to check out your claim for being fraudulent. Official documents have several anti-fraud measures designed by the issuing Government department. A careful check on the documents will help the claims official 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 villain to forge successfully all these documents. I would suggest that you let your insurance company have the original paperwork as soon as they ask for them. Just sending copies delays your claim.

3) Whilst you are waiting for your settlement proposals, your insurance company will be doing further checks as well. They will enter your claim on the 'motor insurance anti fraud and theft register'. (MIAFTR) This is a national data base that has been recording all insurance total loss cars and stolen vehicles since the early 1980's. It checks your car's details against all the information in the database to see if the car has ever been the subject of an insurance total loss before, or whether it has been previously stolen and never recovered. The computer 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 the insurance company might begin a fraud investigation.

The motor insurance anti fraud and theft register also as a matter of course checks your vehicle against the Hire Purchase Information (HPI) database. If you took out finance to purchase the vehicle and you still owe money, it will be on this database. And your insurance company will find it. So be truthful and tell them about your outstanding debt. The finance company is the legal owner of your vehicle. Any settlement will be made to them until the loan is paid off. Anything left over goes to you. Your claim will also be noted on CUE (Claims and Underwriting Exchange). This is done as a matter of course on all motor and house insurance claims. Not all insurers subscribe but the vast majority do.

Problems occur when the outstanding loan is greater than the worth of the vehicle. In this situation the insurance company does not pay off the loan in full. I recall a scheme for motorcycles. Youngsters went into a dealer, bought a new motorcycle plus all the helmets, leathers and so on with finance against the value of the vehicle. The interest rate on the loan was incredibly high. A short time later there was an accident and they would write it off (or it was stolen). The value of the motor cycle was much less than the total purchase price plus the interest. It caused a lot of upset which was blamed on the insurance company rather than the stupidity of the youngster for getting involved in such a bad deal with the shop.

4) Your insurance company will be requesting bids for the salvage. The higher the salvage value the less they will have to pay out on your claim. There has been much publicity about vehicles which have been written off reappearing on the road, or being purchased by the criminal fraternity to aid their disguise of a stolen vehicle. The ABI (Association of British Insurers) have come up with rules concerning the disposal of vehicle salvage. All member companies comply with these rules. The result is that most salvage is sold by the insurers to established salvage dealers. If it 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 repaired and put back on the highway.

5) Once all these hurdles have been overcome your insurance company will make a settlement proposal to you.

Their assessor will have looked up the trade publications to value the vehicle, adjusting these figures for the age, condition and mileage of the vehicle, and his knowledge of the current car market. The final total that he arrives at forms the basis of the settlement figure given to you. Any policy excess will have to be deducted along with any outstanding finance.

Your insurance company should make it clear to you precisely how much you will receive and detail 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) When you have accepted the offer (some companies might request your signature to a document called a 'form of discharge') you will receive a cheque.

7) Your insurance company then own the remains of your vehicle and, subject to legal limitations and those ABI rules, can do whatever they want with it. This will inevitably mean that they will sell the salvage.

Article Source: http://www.topicinfo.com

This article was written by Terry Cod. He has many years of experience working as a claims adjuster with a number of UK motor insurance companies. His website www.instant-online-insurance.co.uk offers Tesco car insurance online with online quotes and secure online payment.

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