Insurance companies are obliged to compensate a motorist in case of an accident or car damage.
According to Insurance Regulatory Authority (IRA), damaged cars or those caught in accidents are either written off or subjected to repairs depending on the cost involved.
However, some vehicle owners end up losing their automobiles even after a slight scratch during an accident.
Writing Off a Car
Write-off is a term used to describe a car considered damaged or unroadworthy by an insurance company.
Most cars are written off in the country after accident incidents or serious damages. The compensation process mostly applies to motorists with comprehensive policies.
Insurance companies provide an assessment commensurate to the amount paid by the car's owner. The policy dictates the compensation procedure if insurance companies write off a car.
How Insurance Companies Write-Off Cars
Too Expensive For Repair
Vehicles under this category can be repaired after the damage or an accident. However, the cost of repair exceeds the car's value.
Insurance companies write off a car and compensate it according to their policies to avoid incurring extra costs.
This happens when a scratch compels the insurance company to take back the car for a complete makeover with cases involving top-of-the-range vehicles such as rare Mercedes Benz and Audis.
Scrap
Under this category, the vehicle is totally damaged or is too old. Furthermore, the spare parts of vehicles under this category cannot even be sold, forcing an insurer to write them off.
In some countries, vehicles severely damaged are referred to as statutory write-offs.
Even if a scratch is minor, but the car is too old, insurance firms are forced to write it off. To avoid getting into such scenarios, most insurance firms only allow cars with certain age to sign for comprehensive covers.
Break
In this category, an insurance company declares a car old or too damaged. However, some parts can be extracted by a mechanic and sold as spare parts.
Insurance companies, in this instance, write off a car because it cannot be repaired and sold a second-hand unit. The owner is compensated depending on the existing policy and agreement with the insurer.
To avoid clashing with policyholders who suffer minor scratches and end up receiving huge compensations, insurers prohibit old cars from acquiring comprehensive covers.
Structurally Damaged
Some insurance companies are forced to write-off a car if it is structurally damaged.
Structurally damaged cars can be salvaged and even re-sold as second-hand cars since the extent of the damage is not severe.
But because the car lost its shape, insurance companies write them off and compensate the owner after which the company can bear the car's cost of repairs before reselling it.
Long Inspection Process
An inspected write-off is a vehicle that used to be a repairable-write off but has since been repaired and re-registered successfully.
However, some insurance companies decide to write off a car if the inspection process by the National Transport and Safety Authority (NTSA) exceeds the agreed timeline.
For a write-off process to be successful, the insurer must return the logbook to the government in accordance with the provisions of the Traffic Act CAP 403.
"If a vehicle is written off by an insurer, the insurer shall forthwith return the registration book and identification plates issued under this Act or the regulations to the Registrar for cancellation," Section 6 (9) of the Act reads in part.
