If my car is written off, what happens to my insurance policy?

Having your car written off can feel like a major logistical headache. Among all the questions you might have, one of the most pressing is, “If my car is written off, what happens to my insurance policy?”

The car insurance write-off procedure can vary depending on what’s happened to your car and the type of insurance you have. Here, we look at the immediate changes a write-off makes and what it means going forward, so you can make the best-informed decisions about what to do next.

What happens when your car is written off? 

If your car is declared a write-off, it means your insurance company has assessed your vehicle and decided that it’s impossible or uneconomical to repair.

Insurers in the UK use four different categories to describe write-offs:

• Category A: Cars in category A can’t be repaired and are considered too old or badly damaged to be used for parts. Cars in this category are usually scrapped or crushed. 

• Category B: Category B cars can’t be sold as a complete vehicle, but they can be used for parts. In the majority of cases, the body of the car still has to be crushed.

• Category S: These cars have suffered structural damage. Some Cat S cars [Note to Howden: Link to “Cat S car insurance” once live] could theoretically be repaired and made roadworthy, but the cost of the repairs would exceed the vehicle’s worth. The typical cut-off is usually around 50 to 70% of the car’s market value. For example, if your car was worth £6,000 before the accident but would cost £4,000 to fix, there’s a very high chance the insurer would write it off as an uneconomical repair. 

• Category N: The damage that Cat N cars have suffered is non-structural, but still complex or expensive enough to have the car written off. 

It’s important to note that no matter how your insurer has assessed your vehicle, several things will happen to your insurance policy immediately after the write-off.

• Your current car insurance policy won’t be valid. You won’t be insured to drive your car after it’s written off, even if it can be driven. 
• Your insurer will become the legal owner of the car. This is known as “retaining the vehicle”. 
• Your insurance will likely be more expensive after a write-off, whether you choose to buy back and repair the vehicle (more on this later) or get a policy for a new car. 
• You won’t get a refund on insurance premiums you paid before the write-off, for example, if you had already paid for an annual policy in full. 

What to know about insurance payouts after a car is written off

You probably have a few specific questions about what happens if you need to make an insurance claim after your car is written off, including:

• How much will my insurance pay if my car is written off?
• How long does it take for insurance to pay out for a write-off?
• How does a write-off affect my future car insurance?

Let’s address these questions one at a time.

How much will my insurance pay if my car is written off? 

The amount of money you get back from your insurer depends on what happened to your car and the type of car insurance you have.

For example, If you have third-party insurance, which only covers you for damage or injury to other people and their property, your insurance might not pay out if your car is written off in an accident where you were at fault. However, if someone hit your car, their insurance should cover your costs. And, if you have comprehensive car insurance, you should be eligible for an insurance pay-out no matter the extent of the damage or who was at fault.

An insurance pay-out after a car is written off is called a “settlement fee”. It’s based on what the car was worth before the accident or breakdown. Your settlement fee should be equal to the market value of the car minus any excess you have to pay as part of your policy.

To return to the example we discussed above, if your car was worth £6,000 and your insurance policy had a £250 excess, you’d receive £5,750 from your insurer after the car was written off.

How long does it take for insurance to pay out for a write-off?

There’s no fixed schedule for processing the settlement fee, so the time it takes for you to receive your insurance pay-out will vary.

Ideally, you should receive a pay-out within 30 days of a claim, but some straightforward cases may be faster. On the other hand, a delay in the assessment from your insurer or a dispute can mean it takes a few months before you receive the funds.

How does a write-off affect my future car insurance?

After your vehicle is written off, you’ll likely have two options. Either you’ll be able to buy your old car back from your insurer and have it repaired, or you’ll have to look for a new car. These both have implications for your car insurance.

First, it’s worth noting that you won’t automatically get to keep your car if it’s written off, even if it’s labelled Cat S or N rather than a scrappage or salvage category. If you think you might want to have your car repaired, it’s important to:

• Tell the insurer as soon as possible that you intend to buy back the car and agree on the costs.
• Get a second opinion from a mechanic about the cost of the repairs to make sure you’re making an informed decision.

It’s also important to know that a write-off will appear in your car’s logbook and the DVLA’s records even after you’ve brought it back up to a roadworthy standard. This is part of the reason that the categories exist in the first place — they give potential future owners a clear picture of the vehicle’s history and any possible safety issues.

This also means that your insurer will know your car has been written off, even if you decide to get a new policy with a different provider. You can shop around for the best deal, but you’ll likely have to pay more to insure the car because:

• You were involved in a serious accident. This will raise your risk profile in the eyes of insurers, and likely cancel any no-claims bonus you’d built up.
• The repairs make the vehicle more expensive to insure because there’s a higher chance of future problems.

It’s more common to let the insurance company keep the written-off vehicle, and buy or lease a new car instead.

If you decide to go down this route, you might be able to transfer your insurance to your new vehicle. Insurers often give you around a month to find a new car to switch your policy to before they cancel the policy completely.

Alternatively, you can shop for new insurance for your new vehicle. Again, you’ll likely face higher premiums than you were paying before, so it might be worth looking at some factors that could lower your premiums.

For example, you could try:

• Choosing a smaller car with a less powerful engine, as these are generally less expensive to insure.
• Increasing your voluntary excess, as long as you could afford to pay the excess if your car broke down or you were involved in another accident.
• Opting for black box insurance with incentives for safe driving. If you’ve lost your no-claims bonus, this can help to lower your insurance premiums quicker.
• Parking your car in a safe place, for example, in your drive or a private garage.
• Paying annually, if you can, as this avoids interest and tends to work out cheaper than paying monthly.

Insurance after a car write-off: Summary 

Whether an insurance company writes off a car because it’s been damaged in an accident or because it’s simply too old to repair economically, your insurance policy will no longer be valid after the write-off. You’ll also likely face higher premiums after a write-off, whether you buy back your vehicle or shop for a new one.

At Howden, we can help you find the best deal for your car insurance. Get in touch today, or visit your local branch, to talk to our expert teams.

Also read:

• What’s the best scrappage scheme for cars?
• What to do if you’re involved in a car accident
• Car insurance groups (a complete guide)
• CAR INSURANCE GUIDES