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Why may more vehicles be declared a write off or total loss?
Updated September 2021
A total loss, or write off, is when your motor insurer declines to repair and return your vehicle to you, following an accident or theft, but will settle you claim in another way. They will declare a write off for your current vehicle, as they decided not to repair it.
Usually the insurance company will be by paying your the current market value of your vehicle at the time of the claim. This is the cost of replacing the written off car with the same age, mileage, specification and condition as your vehicle was prior to your claim. This is known as the market value and is what most fully comprehensive car insurance will protect. 
Why do motor insurers write off a vehicle?
So what leads a motor insurer to decide not to repair your car, but decide the car is written off and instead pay you a cash settlement instead? Well they have to look at the economic cost to repair the vehicle. If the overall cost is too high, compared to the current value of the vehicle then the motor insurer may conclude it is cheaper to settle the claim by writing the car off.
Even if your motor insurer agrees to fix the car, some may require you to pay an excess of between £100-£1000 before they will settle your claim. Remember that the value of the vehicle is factored into any decision about repairing or writing off a damaged vehicle.
Why is my vehicle worth less than I thought?
Your motor insurer will look at how much it would cost to replace your vehicle with one of the same age, mileage, specification and condition. These factors can have a significant effect on the value of other vehicles in the market.
Factors that can lower the value of your vehicle can include:
- higher than average mileage
- no, or incomplete service history
- modifications
- poor overall condition
Any one, or a combination of, these factors can mean the benchmark value of the car from your motor insurer will be lower than you think.
The cost of repairing the car
Next, the insurer will get an estimate as to the cost of repairing the car back to it's pre-claim condition. This can be an objective valuation by their specialist insurer, or it might come from the garage that is preparing the vehicle for repair.
In some cases, your motor insurer may ask you to hand over ownership of your car if they determine that the cost of repair will exceed a certain percentage of its market value. In this case, rather than repairing the car they will choose to settle the claim by giving you a cash payment.
Factors in the cost of the repair.
The cost of parts is the first area to consider. These may come as a bit of a shock also.
Even in the most innocuous of collisions you will find a number of airbags may be deployed. It is not just the cost of the airbag itself, but other parts of the airbag system that may also need replacing.
These may include sensors, an airbag ECU and the item where the airbag is housed, like the dashboard or the steering wheel.
It a heavier collision you can find all the airbags are deployed. They can be housed all over the interior of the car.
Replacing airbags alone can run into thousands of pounds in costs.
Then we have to look at the costs of other replacement parts. Body panels, electrical components, tyres, alloy wheels, exhaust systems and more all seem to have got more expensive as manufacturers develop their vehicles.
Labour costs
It has been reported in Fleetnews that the average repair costs at body shops have increased nearly 50% since 2013, and nearly 21% from 2018 to mid 2020.
Adding these increased costs to the costs of the parts means that the total bill for a repair can be far higher than it will have been just a few years earlier.
The Covid effect
The impact of the Covid pandemic has also been seen with how motor insurers may judge a claim.
On the one hand there have been less vehicles on the roads. Less vehicles means the chances for accidents have also diminished to a degree.
However, when an accident does happen then insurers are confronted with issues they may not have expected.
The availability of parts for a repair
The manufacturers of replacement parts have come under the same issues as the vehicle manufacturers.
Lock down impact, employee absenteeism due to having to self isolate and problems with the supply chain means that many replacement parts are taking much longer to arrive.
If you factor all these into your claim then you will understand that this can lead to vehicles having to be held in the repair facilities for far longer than before.
This means some insurers having concerns over extended hire car charges for their customers while waiting for theirs to be repaired.
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Insurers have a decision to make.
The combined impact of all these factors can push insurers into deciding to write off the vehicle in a claim, where they may have repaired it in the past.
Using their own cost price ratios for repair costs can also see them deciding to settle matters where before they might not have considered it.
Once the insurer has decided to declare a write off there is little you can do either.
So the big question is, if your vehicle was written off, would you have enough in the insurance settlement to buy a similar replacement?
But in some cases, if your insurer decides this is inadvisable, they may choose to settle the claim by giving you a cash payment.
Why Gap Insurance could be an important protection to have
If you have Gap Insurance then it's important you know just what this cover is designed to do.It is designed to protect your investment, not just on the purchase of a car but after that too.
If at some point during the term of that insurance you suffer a total loss on your vehicle then Gap cover can step in and give you a cash payment back to the original price you paid, or the replacement cost. This will help you add to your motor insurers settlement, to clear any finance settlement figure and leave you some cash to put towards a replacement car.
If this has happened to you then you will know how important it is, especially if your vehicle was written off by your insurer. If motor insurers are looking to write off vehicles more than they have before then Gap Insurance cover can be a valuable extra protection.
With a multitude of factors that make it harder, and more expensive, to repair vehicles than ever before we may see an upward trend in vehicles being written off for some time yet.