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New insurance write-off categories on the way

It’s always the same. Just when everyone has got used to something, along comes someone who just has to change things around so nobody knows what’s going on any more. The perfect example is the insurance write-off system; for years we’ve had category A, B, C and D write-offs, but that’s all set to end on 1 October. That’s because from this date, written-off cars will instead be categorised A, B, S and N.

Thatcham is a safety and security testing facility (based in Thatcham, Berkshire) and in conjunction with the Institute of Automotive Engineers the new categories have been devised, in a bid to ensure that damaged cars are categorised correctly. Or to put it another way, the new scheme is being introduced to make sure that cars that are too badly damaged won’t be returned to the road.

In theory this means that the rules for repairing written-off cars are being tightened up, but it doesn’t work quite like that. Last year we spilled the beans on how the write-off system works and in 2015 we told you why knowingly buying a write-off can be a good idea.

Read that first blog and you’ll see that a car is written off because its repair costs exceed the insurer’s threshold, which is usually around half of the car’s value (although it varies from one insurer to another). The new structure is being introduced to keep dangerously damaged cars off the road, so the focus is on the car’s condition rather than the cost of fixing it.

The thinking was that some badly damaged cars could be fixed relatively cheaply and put back into use. However, as that first blog spells out, the complexity of modern cars and the associated high costs of repair mean the reverse is usually true – cars with just light damage are being scrapped because making things good often exceeds the value of some relatively youthful cars.

Incidentally, when that blog in 2015 was written, it was mandatory to put any written-off car through a Vehicle Identity Check (VIC) before it could be returned to the road. The VIC scheme was introduced in 2003 in a bid to stamp out ringing. This is where criminals try to pass off stolen cars as accident/damage-repaired, but between 2003 and 2015 when the scheme was abolished, just 40 such cars were submitted for test – out of over 916,000 inspected. The economics just didn’t stack up and the VIC was no more.

The new categories

As with the outgoing system, the new insurance write-off structure will consist of only four categories – so straight away it’s not easy to see why after 1 October things will be better. Those categories are:

Category A: As with the outgoing system, these are the cars that have been so badly damaged that they can only be crushed as there’s no possibility of salvaging any parts from them. This is just like the old category A.

Category B: This is the same as before, but now the B stands for Break because these cars can only be broken for any useful parts they can provide. That’s the most that can happen with them – but if it’s not economically viable to strip the car for parts it will just be crushed.

Category S: If a car has suffered structural damage it’s assigned to this category. As long as the car has been professionally repaired it can be put back on the road but crucially, cars that fall into this group can’t (or at least shouldn’t) be repaired on a DIY basis. So much like the old category C then.

Category N: The equivalent of the outgoing category D, this is for cars that aren’t damaged structurally. However, some safety-critical parts such as those related to the suspension or steering, might need to be replaced.

So while categories A and B are unchanged, what was category C becomes category S. Cars used to be put into this band because repair costs exceeded the vehicle’s value – it was all about the economic reality. Now it’s purely about whether or not the car can be fixed, although insurance companies are bound to look at whether or not the financial case stacks up, as that’s all they’re interested in.

Similarly, what used to be category D is now category N, with cars once again graded according to what damage they’ve sustained rather than how much it’ll cost to get the car roadworthy again.

Whether these changes will actually make a difference to how many and which cars are returned to the road rather than binned (and vice versa) remains to be seen. Whatever the outcome of the new system there are two golden rules that still apply. The first of these is that before buying any used car, invest in an hpi check to make sure that it doesn’t have a shady past.

The second golden rule is that if you’re knowingly buying a car that’s previously been written off, spend some cash on an engineer’s report to ensure that any repairs have been carried out to the necessary standard. Just because the VIC is no longer a requirement, there’s nothing stopping you from investing in a key check of your own for some peace of mind.

Richard Dredge

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