car insurance on written off car

nirvana_3

I purchased a car in August from somebody I knew the mechanic I use serviced the car and knew the car well .It was first registered in 1998 and I had it MOT and taxed and got the insurance through the CIS. Two weeks ago I had an accident and the car was a writ ten off. The car was taken to a car yard which the police arranged and the CIS arranged for an Engineer to value the car (I had paid a £1000 for the vechile and it was insured for market value) I was called to give details of where I purchased it and other details and was asked to send in the V5 and MOT cert. I rang up yesterday to see how things were going as I am without a car and was told there was a problem that the Vechile had been written off previously in Oct. 1999 (c) catogory and therefore was not worth market value. I called the DVLA who said they had no record of this and as far as they were concerned the V5 was correct. I told thhe CIS this and they said that the DVLA were wrong and that their infomation was correct. I am confused as how did they insure the car in the first place if it had been written off I got Tax on the car and the DVLA issued me with an up to date V5 . Can anyone help please.