Insurers generally write off vehicles that have sustained damage in the region of 65 to 70% of their book value as repairing them would be uneconomical.
“Yet many people who drive older vehicles would prefer to repair these after accidents as they cannot afford to buy new vehicles,” says Shirley Burger, National Head of Claims, Alexander Forbes Insurance.
The problem is that most older vehicles have lower values. For example, if a 10 year old bakkie insured for R38 000 sustains damages in an accident and costs more than R38 000 to repair, the insurers would write the vehicle off, paying the policy holder R38 000 rather than repairing the vehicle.
However, most policy owners in this position would not want to buy a pre owned vehicle for R38 000 and would rather have their vehicle repaired, Burger says.
In these instances she advises policyholders to speak to their insurers about repairing the vehicle using alternate or second hand parts in order to keep the cost of repairs low enough to avoid writing the vehicle off.
“When insurers advise the use of alternate parts they are not being cheap or trying to trick policy holders” explains Burger. “Instead, they are looking for a way to reduce the repair costs so that the vehicle is not classed as a write off and can be repaired, preventing the policy holder from losing a vehicle that they, otherwise, would not be able to replace”.
It also makes sense to keep your vehicle in good condition. If an old vehicle in good condition is involved in an accident, the insurer will take the full book value of the vehicle in to account when calculating the repair costs.
If an older vehicle has been poorly maintained then the insurer would compare the repair costs to a reduced value. This may well result in the repair cost reaching the 65 – 70% mark sooner, thus declaring the vehicle uneconomical to repair, “whereas if the vehicle had been well maintained it would have sustained higher repair costs and might not have been uneconomical to repair,” explains Burger.
Accident damaged vehicles less than a year old are usually replaced with new vehicles, should it be uneconomical to repair them. Since vehicles often lose value after accidents, owners of new vehicles prefer them replaced as “even well maintained cars with low mileage fetch lower re-sale values following an accident,” says Burger.
Insurers on the other hand would repair new vehicles when it is more economical to repair than to replace (i.e. cost less than 65-70% of the value of the vehicle).
That said, new vehicles need to be repaired with manufacturer-supplied parts as they are still under warranty, making their repair more expensive and write off more likely.
You can, however, afford to repair an old vehicle with alternate or second hand parts, “especially if this prevents a write off and saves you having to buy a new car,” concludes Burger.
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