If your car met an accident and the damage is beyond repair, it may be “written off by the insurance company.” It can turn out to be the worst nightmare for a driver. Think about it that you are driving and accidentally crash.
It not only comes with injuries but losing your car on finance too. Yes, you may lose your car after a collision. To save yourself from the hassle, talk with your insurance company. You may not like it, but some insurance companies write off the insurance.
What does an insurance writer imply?
An insurance company may write off the insurance if the car is beyond the damage. No company would be eager to finance a car on loan whose repairs cost more than the actual vehicle cost.
Here are some damaged vehicle categories that you may encounter:
- Category A- these write-offs are for scrapped cars beyond repair chances
- Category B- It is for vehicles that are still beyond repair, but one can re-use some parts
- Category C- It is for vehicles that can be repaired but may cost more than the actual vehicle cost
- Category D- It is for vehicles that can be repaired, but the overall costs may exceed the total vehicle cost
- Category S- It is for vehicles that can be repaired due to only structural damage
- Category N- It is for cars that can be repaired due to non-structural damage.
What events proceed after the insurer writes off the cover?
Getting into insurance written off is the worst part of the agreement. It becomes troublesome if you have an outstanding car finance balance.
After the company writes off your car insurance, the car becomes the property of the finance. It is until you clear the remaining portion of your car finance deal.
It could cover the exact amount if you have pre-paid the amount and are regular on payments. Missing a payment may lead to extra charges or penalties. If you are on car finance on a bad credit agreement, try to pay the remaining balance timely. If you find it challenging in the mid of the agreement, talk it out with your provider. It will help you get track of the payments without impacting the bottom line.
After clearing the balance, you get your car back. It becomes the property of the insurer then.
What should you do if your car insurance gets written off?
Depending on the category your car falls in, you may have the below options:
- Clear the outstanding balance on the car finance agreement
- Buy the car and pay for the necessary repairs
- Or buy a new car with the insurance money
- Switch the car if your car finance agreement provides it. With an outstanding balance, it may be difficult to do so
Here are other steps to take next:
1) Contact your finance provider
It is the first step you should take. Analyse the problems you face like- financial change, inability to clear repayments, non-repayment or capability to pay further. The Sooner you reach out to them, the quicker the solution will be.
They may enquire about your interaction with the insurance firm. Tell them that it is the next port of call for you. Do not hide anything from the lender. Ensure transparency to get maximum help.
2) Discuss things with your insurance provider
Next, as you said, interact with your insurance provider. He will help you analyse the best options for your case. He may familiarise you with the rules and the categories. If you share a good bond with your insurance company, they may be eager to help you out.
Like the lender, keep things transparent here. Tell the exact incident that led to the car collision or damage. Analyse and stress the solutions for your car finance agreements. If you are regular on premiums, the providers may be eager to help you.
3) Consider the possibilities of a GAP Insurance
Guaranteed Asset Protection Insurance ( or gap insurance for short) is a type of insurance that covers the market value of the vehicle at the time of loss and the outstanding finance.
However, it may not be ideal for every person. You can go for it if:
- You lack funds to cover the remaining balance between the car finance balance and the market value of the car.
- Your initial deposit was small, so you have a good lump that you need to pay
- You took out a long-term car finance
4) Inform the DVLA
Register your case with the DVLA (Driving and Vehicle Licensing Agency). It records the vehicles listed in your name. You should tell the exact reason behind the insurance company writing off your vehicle. It will help them de-register the car.
5) Obtain a settlement of the figure from the insurance company
The settlement figure is less than the overall value of the car. The difference between the market cost and the settlement works as a deposit towards a new or as a cashback.
If the car value is less than the total pending amount, the car finance enters negative equity.
It happens when the car deposit owner changes the agreement early with pending repayments.
Some lenders may accept a small amount as a settlement to figure out the negative equity. You would need to discuss it. If you have any queries regarding deciding the settlement figure, contact the expert. Alternatively, you can calculate it yourself by using the settlement figure calculator. Different lenders have unique criteria, interest rates, and terms and conditions.
You usually have to pay the amount within 28 days of the agreement.
If you fear missing the date as you receive your salary on 30th of every month. Do not worry, you can check small loans in Ireland for your needs. You can use it to pay and clear the dues. Even if you have minimal savings, you can get up to €5000 as help. You do not need to stake anything to get one. Instead, you can get minimal cash by providing your regular income as proof. Thus, you can clear the settlement figure hassle-free.
Thus, it is important to analyse the deepness of the car damage before claiming it. The insurance company may write off the insurance in the above-listed conditions. Talk it out with your provider and clear the dues if possible. It would help you get debt-free or begin a new car finance agreement without past dues.