Motor vehicles can be written-off in a number of ways. But what does the term written-off mean?
In essence, it means a vehicle has been deemed by an insurance company too costly to repair, not financially viable to repair – or damaged to such an extent is not safe to repair, even with proper methods, parts and equipment.
Motor vehicles are primarily written-off due to crashes or severe storm damage, including from hail.
If a write-off is the result of a crash, it does not matter who is at fault in the collision when determining a write-off. Determining who is at fault will simply decide whose insurer will be responsible for the insurance payout.
If an at-fault driver causes damage to another car that is deemed a write-off, his or her insurer will be required to pay out the innocent party.
If a not-at-fault driver’s car is written-off due to someone else’s actions, the other driver’s insurance will be required to pay.
However, if an at-fault driver does not have comprehensive insurance that covers damage to other cars and property, the innocent party may need to go through their own insurance company to make a claim.
It is more common and more likely for older vehicles to be deemed a write-off by an insurance company because the cost of repairs is often higher than the car is worth once it has been repaired.
For example, a 10-year-old car might be worth $7000 on the used-car market. But if it is severely damaged in a crash – and the quote for repairs is more than $7000 and comes in at, for example, $10,000 – it is likely the insurance company will pay the owner $7000 or the “agreed value” of the vehicle, if that has been nominated on the policy.
However, if a near-new car worth $20,000 incurred $10,000 worth of damage – and the damage is not likely to be an ongoing safety concern – the insurer may elect to repair the vehicle because that is the cheaper of the two options.
Older motor vehicles are often written-off due to severe hail or storm damage because the cost to repair them is dearer than the cost of the payout figure. When cars are written off due to storm damage, owners must pay the insurance excess.
In NSW it is not possible to buy or register a motor vehicle that has been written-off for economical or safety reasons. This strict policy came into force to thwart professional thefts.
NSW authorities say: “A vehicle is a total loss when the cost of the repairs plus its value as a damaged vehicle (its salvage value) is higher than the market value (of the vehicle). Written-off (cars) cannot be re-registered in NSW, except in limited circumstances. The vehicle can still be bought and sold, but only used for parts or scrap metal.”
Prior to the NSW clamp down, the scam worked like this: criminals would buy at specialist auctions cars that had been damaged, purely so they could obtain legitimate Vehicle Identifying Numbers (VINs) and become bonafide owners of a ‘car’ with those identifiers.
Criminal gangs would then steal the same type of car and replace the stolen car’s VINs with the identifying numbers from the wreck. This process was called “rebirthing”, or giving a stolen car a new, bogus identity.
To thwart this process, authorities in NSW banned the re-registration of all types of written-off vehicles – except in exceptional circumstances, such as rare vehicles of historical significance.
A national Written-off Vehicles Register (WOVR) has been established to better identify all types of written-off vehicles, so prospective buyers can make an informed decision on a potential vehicle purchase.
States and territories other than NSW allow vehicles written-off for economical reasons to be re-registered – after a forensic inspection to detect the quality of the repair and signs of rebirthing.
However, vehicles that have been deemed to be a statutory write-off – that is a vehicle that has “been assessed as a total loss with damage too severe to be repaired and returned to the road” – cannot be re-registered.
Queensland guidelines are indicative of the rules regarding statutory write-offs in most jurisdictions: “The vehicle identification number (VIN) is recorded as a statutory write-off in a written-off vehicle register, and the vehicle can’t be re-registered in Queensland or any other Australian jurisdiction, even if repaired. These vehicles are suitable only for parts or scrap metal.” Furthermore, “any section of the statutory written off vehicle that contains the Vehicle Identification Number stamping (VIN or Chassis number) cannot be used.”
While NSW bans the re-registration all written-off vehicles, some states only ban vehicles deemed to be a statutory write-off, and then VINs are flagged as not being eligible for re registration.
In NSW, cars written-off due to hail damage that are retained by the registered owner are treated differently to other written-off vehicles. “The registration of the vehicle is not cancelled and no restrictions are placed on the registration. However, the Certificate of Registration will show that the vehicle was previously written-off,” say NSW authorities.
A “repairable write-off” refers to a vehicle that has been deemed uneconomical to repair – but has no major safety concerns. Such a vehicle can be re-registered in other states except NSW.
In such instances, insurance companies prefer to pay out the customer – rather than approve an uneconomical repair. The insurance company then endeavours to recoup some of its costs by selling the wreck at auction. In such circumstances, the written-off wreck could be bought by someone with specialist skills who can restore the car to road worthy condition for less than what it might cost an insurance company.
This is how repairable write-offs can eventually find their way back on the road.
Confusingly, although repairable write-offs sourced from within NSW cannot be re registered in NSW (except in exceptional circumstances), it is possible to re-register a vehicle that has been written-off for economical reasons – but then repaired – in another state and then had its registration transferred to NSW.
In such instances “the vehicle must be repaired, inspected and registered interstate before you can apply for NSW registration,” say NSW authorities. And if the vehicle has been registered for less than 12 months, it must be inspected by NSW authorities to confirm its bonafides.
It’s worth noting that insurance companies know a vehicle has been written off – even if it has been deemed a repairable write-off – because the VIN is listed on the WOVR.
A repairable write-off could be subject to a slightly higher insurance premium because it has suffered previous damage which could lead to more costly repairs at a later date if the car is involved in another collision.
Customers who are concerned that the used vehicle they are looking to buy could be a repairable write-off (tell tale signs are fresh paint, and a lower asking price than similar vehicles of the same type) can search online using the vehicle’s registration number or VIN.
The REVS (register of encumbered vehicles) website was originally designed to help car buyers determine whether or not a vehicle they were looking to buy still had finance owing on it.
A new site has expanded its services to include data on whether or not a vehicle has been written-off and repaired, has been stolen, and if it is the subject of a Takata airbag recall. The cost of a report as this article was published was about $36.95.