Cost of repair v value of car if no-fault

ennnceee

It seems to me that a car is deemed a write-off  - albeit in various categories - by motor insurance, whether that of the at-fault or no-fault driver, if repair of the damage would cost more than the value of the car. I am trying to discover if this is universal and if so by what decree, so to speak? Is it also true of what I believe is called third-party intervention whereby the at-fault insurance can pay for the repair and if so are they also bound by the cost of the repair and the value of the car?

I hope that makes sense! Thanks...

paul_c123

Its the repair + potential car hire costs > cost of payout - salvage value of car.

XRS200

The decision to write off is pure economics  - nothing to do with fault.

Aretnap

If you claim from your own insurance policy, regardless of whether you are at fault of not, what you are entitled to will be defined by the terms of the policy. In practice the policy terms will nearly always say that the insurer has the right to choose whether to repair the car or to pay you the market value, and naturally they will choose whichever works out cheaper for them.

If the accident was someone else's fault then as an alternative to claiming firm your own policy you can also try to claim directly from the other drivers insurer. In that case it works rather differently; your rights are determined by tort law, not the terms of any insurance policy. And under tort law you are entitled to the loss of value that your vehicle suffered as a result of the accident. In other words, the difference between what your car would have sold for five minutes before the accident, and what it would sell for five minutes after the accident. By definition that can't be more than the pre-accident value of your car.

(It follows that in a third party claim you are not strictly speaking claiming for the repairs at all. However in most cases the law will make the assumption that a £5000 car that needs £1000 of repairs would sell for about £4000, so what you actually end up claiming for us the cost of repairs. How true this assumption is is questionable, but it certainly makes life easier than having to work out a market value for every damaged car.)

DullGreyGuy

ennnceee said:

It seems to me that a car is deemed a write-off  - albeit in various categories - by motor insurance, whether that of the at-fault or no-fault driver, if repair of the damage would cost more than the value of the car. I am trying to discover if this is universal and if so by what decree, so to speak? Is it also true of what I believe is called third-party intervention whereby the at-fault insurance can pay for the repair and if so are they also bound by the cost of the repair and the value of the car?

I hope that makes sense! Thanks...

Third party claims are effectively decided by the courts not insurers. 

If you are involved in a non-fault accident you are entitled to indemnification, ie to be put back into the same financial position as you were immediately before the accident. Lets say you have a £30,000 and it suffers damage which are will cost £3,000 to repair. In principle the third party (or their insurers) should pay you the difference between the value of your vehicle 1 second before the accident and 1 second after the accident. The courts have accepted that that is difficult to judge accurately and therefore use the cost of repairing it as a reasonable proxy for it. 

Now if your car is worth £2,000 instead then the insurer could repair the car at the cost of £3,000 and you would still have a car worth £2,000 but that makes no economic sense for them to do so and so in effect they just buy the car from you so give you £2,000 meaning you are now back in the same economic position just the car has been liquidated into cash. 

No insurer will pay more than the market value of the car to repair it, most won't pay 80% of the car's value to repair it but will write it off instead. The courts are happy with this as a remedy as it achieves indemnity. 

Exactly the threashold for write off may vary between firms but the principle is the same and you cannot force them to pay more. You are however free to pay to keep the salvage and choose to have it repaired yourself (assuming not an A or B category). Undoubtedly cash in hand/secondhand part options that are open to you will significantly reduce the cost of the repair compared to what a garage will quote for an insurance job using brand new components, full blending in of paint etc. 

ennnceee

Many thanks, wiser now.