Is it worth buying a classic write-off?

Without thinking for too long, give us your definition of a 'write-off'. It's probably something like: a car that’s been involved in an accident and has been left completely undriveable, fit only for the scrapyard.

And yes, that may often be the case. However, not all vehicle write-offs are created equal. Many cars get landed with the designation 'write-off' for the rest of their career – but actually remain perfectly viable driving and ownership propositions.

So, just what constitutes a write-off, and can it ever be a good idea to buy one? Let's begin with a definition of the term, and all the varieties it can encapsulate. We'll then look at whether buying a classic write-off could ever be a wise move for you.

Whatever state your next classic buy is in, make sure it’s protected with some classic auto insurance before you take it on the road.

What exactly is an insurance write-off?

You may imagine that an insurance write-off has always involved a bad car accident that has left the vehicle permanently unfit for the road. However, that's not always the case.

When a car suffers damage, an owner’s first course of action is usually to make a claim on their insurance. In most cases, if the driver has an insurance policy that covers them against the damage, the insurer will pay for the cost of repairs.

However, if the insurer's assessment of the vehicle and the damage tells them that the repairs are likely to be too high in relation to the car's value, they will pronounce the car a 'write-off'. That means the insurers will keep the car, paying out its market value to the owner (minus any insurance excess the latter may have taken out).

Essentially, an insurer will designate a car a 'write-off' in one of two cases. Either the vehicle is so badly damaged that it's no longer safe to drive, or the costs of repairs will exceed a certain proportion of the vehicle's current value.

Interestingly, that figure is typically somewhere between 50 and 65 per cent – meaning that, if the repair bill looks like being even a little over half of the value of the car, insurers often won't want to pay for those repairs, and will prefer to effectively buy the car from you and sell it on.

The damage, in the latter scenario, might not necessarily be from a traffic accident at all – it may have been caused by water or fire, for example, or even from pests entering a vehicle while it's in storage.

Now, that point about the damage to the vehicle exceeding a portion of the vehicle's value: this is going to depend completely on that valuation. For example, a vehicle that's only been valued at £500 in the first place won't have to sustain much damage – perhaps just some minor scratches to the paintwork or a small dent – in order to be judged a write-off.

Are all write-offs treated the same?

No – and this is the interesting bit. The car is evaluated by an assessor and put into one of four categories, depending on both the damage and the overall condition of the car. These categories then decide what fate awaits the vehicle. They are:

Category A
In this case, the assessor judges that the vehicle can't be repaired or recycled in any form, and should be crushed.

Category B
Here, the vehicle as a whole cannot be repaired, but there may be some usable parts of the car that can be salvaged and sold onto car breakers or parts specialists.

Category S (previously Category C)
Cars in this category are repairable but, in view of the sustained damage to the frame or chassis, the insurer has decided not to undertake the repairs. Essentially, the vehicle has suffered significant structural damage. This might be a twisted chassis – or perhaps a crash has caused the car's crumple zone to collapse.

These are structural, rather than cosmetic issues, and the car will need the attention of professional repairers. Until that time, it's not safe to drive. After their repairs, 'Cat C' cars may be used on the road again – but the owner will need a new V5 document from the DVLA, showing that the vehicle has been properly repaired.

Category N (previously Category D)
In this final category, the vehicle is repairable and hasn't suffered damage either to the frame or chassis. However, the insurer has still decided not to go ahead with repairs to the vehicle. Even though the faults in this class aren't structural, they can still prevent the car from being roadworthy – there may be problems with the brakes, steering or other crucial safety features, for example.

This category can also include cars which have been stolen and then recovered. The damage here might be minimal (a broken steering lock and smashed window, say), but their owners don't want to retain the vehicle.

What happens when the car has been designated?

When a car is written off, this means that ownership is transferred from the owner to their insurance provider, who will pay the owner a sum in compensation. This sum will be an agreed market value for the damaged vehicle. It's a very good idea to request a two-year agreed valuation when you first take ownership of the car - something we can offer here at Lancaster.

However, in Categories S and N above, the owner has the option of buying back the car and fixing it themselves. Perhaps the car is a Category N write-off and can still be driven, or perhaps the owner is able to repair the damage for less than the cost of a replacement car.

In each of these cases, the DVLA must be notified of the write-off. In the case of a Category S car, the DVLA will assess any repairs before they pronounce the vehicle roadworthy again. Category N cars present a slightly different case: as the damage is usually superficial, it doesn't typically require further assessment.

Should I buy a write-off?

Purchasing an insurance write-off can be a tempting choice. After all, you will be able to find something – the particular classic car of your dreams, for example – at a fraction of the price of a similar car that's not suffered the same damage.

The drawbacks, obviously, are the costs that will be involved in inspecting the vehicle and getting it back to full roadworthiness. The costs of these repairs could easily exceed the price you might pay for a much better maintained example of the same car. There may also be complications when it comes to protecting the car with some classic car insurance – we look into that more fully further down.

So, what should you consider when you see an advert for an insurance write-off? For starters, you'll only ever see adverts for Category S and N vehicles, as A and B write-offs are not suitable for repair and must never be offered for sale.

In the case of Category S and N cars, the vendor has a legal obligation to make that status clear on all advertising, and to inform you of the car's history. This includes specifying the nature of the incident that brought about the write-off, and providing documentation about any repair work that has been made.

It's important to be aware that this Category S or N designation will remain on the car throughout the remainder of its working life – no matter how well it's restored. A well restored Category S vehicle is still a Category S – and this fact will have a significant impact on the resale value of the car, if and when you ever decide to sell it on.

We strongly advise looking thoroughly into the likely resale value of any insurance write-off. It won't be close to the value of any non-write-off cars of the same type, but you may still get a decent return on your (minimal) investment.

Remember, too, that not all write-offs have suffered major damage. For example, some vehicles may have been stolen and then recovered by the insurance companies, with hardly any damage to the car. These can make excellent used buys.

Write-offs: what to look for

It's important, of course, to take a good look at whatever damage the car has sustained, and to assess how much it will cost you to repair.

Some particular write-off scenarios, however, can often make great used buys. For example, vehicles that have suffered flood damage can often be real bargains, as the work needed to restore them won't be as much as the discount they're being sold for.

Just be sure to arrange for an in-depth inspection of the car, as it may look just fine from the outside but be hiding various problems which may only get worse. Also find out how badly the car was flooded, and what sort of water was involved – salt or sewage water are far more harmful than fresh water to a car's bodywork and mechanicals.

After confirming the vehicle's history, we'd strongly recommend arranging for a vehicle inspection. This will confirm the car's mechanical state of health, and flag up any hidden issues that could otherwise mean headaches and expense further down the track. An inspection can cost under £100, and will be money well spent when compared to any savings you'll be able to negotiate on the purchase price due to any problems it has revealed.

Is it difficult to get insurance for a previously written-off vehicle?

Once you've purchased your bargain write-off, will you be able to protect it with the classic vehicle insurance that it needs?

Insurers are naturally wary of write-offs, even cars that have been restored to good condition. This is because the insurers are effectively taking a risk on any non-factory-standard repairs that might have been made. As a result, they will naturally charge higher premiums against any claims that may later arise from non-standard workmanship.

Some insurers simply won’t consider covering such a car, and those that do may charge a higher premium. Those insurers that do agree to cover Cat N or S cars may also insist on an independent engineer inspecting the vehicle before agreeing to provide a policy. An MOT pass certificate may also qualify as proof of roadworthiness.

Other insurers, conversely, may not ask about a vehicle’s crash history when providing a quote. In these cases, the car's past status as a write-off won't affect your premium. However, in the event of any subsequent accident and claim, they will then demand a full history in order to be sure that a poor repair job wasn’t a factor in the damage.

As a rule of thumb, always give your insurer as much information about the vehicle as you can as soon as possible.

Other things to remember about buying a write-off

If you've taken the plunge and bought an insurance write-off, you have the satisfaction of knowing that you've got hold of a car at a considerable discount – and that any repairs you have to make may not come close to the savings you've achieved. Remember, though, that if you ever come to sell it on, the same will apply: that Category S or N designation will mean that you will be selling it at a lower price than its condition warrants.

However, if you're not planning to resell any time soon, but simply want to enjoy restoring, maintaining and driving the car, you could be onto a very good thing.

Finally, we recommend only buying an insurance write-off if you are totally confident about the vehicle’s history and structural integrity. Make a thorough inspection (with the help of a professional, if applicable) of any repair work that has been carried out, and make sure you know how the damage occurred in the first place.

Classic car insurance from Lancaster

Wondering if the Category N or S classic that you have your eye on will qualify for classic car insurance?

Here at Lancaster, we have decades of experience of insuring a wide range of classics in various states of repair. Why not get in touch with us to discuss your needs?

We will then approach our panel of expert underwriters, to see if we can cover your vehicle of choice.

Call our specialist team on 01480 484826 or contact us to start the conversation.