With the vast number of cars on the road nowadays, collisions are sometimes unavoidable. Apart from the risk of injury, there's also the inconvenience of being without a car while it's being repaired and the difficulty of dealing with insurance providers.  

If your car has been in an accident and is unable to be repaired, it will be ‘written off’ by the insurance company. So, what happens if your car is written off while on finance? And what if it's not your fault?  

In this article, we'll discuss insurance write-offs and all the different types, along with examining each scenario so you know what to do should the worst happen after a pcp car accident. Scroll down to get the lowdown in minutes.  

What is an insurance write-off?  

An insurance write-off, also known as a total loss, is a determination made by an insurance company that the cost to repair a vehicle following an accident is greater than the vehicle's value. In other words, the car is deemed beyond repair and not worth fixing.  

When an insurance company writes off a car, it is usually due to one of three reasons:  

1. It’s unsafe to be driven again
2. The damage is too expensive  
3. The repairs are more expensive than the car’s market value

If you have a big repair bill that can’t be funded by insurance, split the car repair into interest-free monthly installments. With Bumper, you can apply for a credit limit of up to £5,000 and see a list of local dependable garages near you.

Are there different kinds of car write-offs?  

Yes, there are multiple categories of write-offs. Insurance companies use these to assess the damage.  

The four classifications used up to October 1, 2017, were A, B, C, and D, with the severity of the damage descending by category starting with A.  

After consideration, the ABI revised the salvage rule to emphasise structural problems that compromise safety rather than just the expense of repairs. These days, the categories are A, B, S, and N.  

Category A (Scrap Only)  

Cars that are severely damaged ought to be crushed and never be seen again on the road. Even parts that can be salvaged must be destroyed.  

Category B (Break for Parts)  

Crushing the body shell is required. Despite some pieces being salvageable, there has been considerable damage. The car should never be driven again. However, salvaged pieces can be used in other vehicles that go on roads.  

Category S (Structurally Damaged but Repairable)  

This might involve a twisted or bent chassis or a collapsed crumple zone during a collision. A professional repair is required because Category S damage goes beyond mere cosmetic issues. Until the repair is complete, driving won't be safe.  

Category N (Not Structurally Damaged, Repairable)  

For vehicles that haven't suffered structural damage, the problem may be merely cosmetic or an electric issue. However, don't assume these vehicles can be driven. Non-structural issues can affect the brakes, steering, or other safety-related components.  

What happens if your car is written off while paying finance?  

If your car is written off while you are still paying finance, the outcome can depend on the type of finance agreement you have. The two main types are HP and PCP.  

See the difference between each below.

What happens if you crash a HP car?  

Firstly, you should contact your lender and inform them as soon as possible. They’ll be able to give you your personalised options.  

Generally, if you have a hire purchase (HP) agreement in which you own the vehicle from the start of the finance term, the insurance payout will go to you. So, unfortunately, you will be responsible for paying off any outstanding finance.  

Related Reading: How does car loan refinancing work?

What happens if you crash a PCP car?  

With a personal contract purchase (PCP) agreement, you don’t own the car until the end of the finance term. In this case, the vehicle will typically be returned to the financing institution.

However, you will still be responsible for making the monthly finance payments until the end of the agreement. Any payout from the insurance company will be used to pay off the outstanding finance.

​​If your car is written off while you are still paying finance, you must go through your insurance company to cover the cost of repairs. You may be able to dispute the value of the write-off. Or convince the insurer that the value of the car is worth repairing.  

If successful, this can mean paying for repairs yourself. Alternatively, you can buy the car back and repair it. Other options include clearing the outstanding balance on your finance agreement or purchasing a new car with the insurance money.

If my car is written off what happens to my insurance?  

If your car is written off, your insurance policy will still be in effect. You will also still need to pay any remaining premium.

However, the policy will be adjusted to reflect the fact that your car is no longer driveable. If you have comprehensive coverage, your insurance company will pay out the value of the vehicle minus any policy excess.  

Do you still need to make monthly finance payments if your car is written off?  

You must still make any remaining monthly finance payments even if your car is written off.  

You must do this until the finance agreement is settled. It is essential to review the terms of your finance agreement to understand your obligations in this situation. 

What should you do once your car is written off?  

If your car is written off, you should contact your insurance company to begin the claim process. They will provide you with instructions on how to proceed.

Afterwards, you should inform the finance company about the write-off and follow their process. You may also wish to consider purchasing a replacement vehicle. You can do this by continuing with the finance or lease agreement or purchasing a new car outright. 

Generally speaking, whether your car is a Category S or Category N write-off, you have one of two options:

1. Purchase a new vehicle using the insurance proceeds. Once you've completed this, you'll pay the finance normally.  
2. You can pay for the repairs yourself after buying your car back.

Can I scrap my car with outstanding finance?  

If you have outstanding finances on your car, you must pay off the remaining balance before you can scrap the vehicle.  

This is because the lender (such as a bank or financing company) is still interested in the car. The interest will need to be paid off before the car can be sold or scrapped.  

If you scrap the car without paying off the outstanding finance, the lender may take legal action against you. This is to recover the remaining balance. It's essential to check your loan agreement.  

What if my car is damaged but not written off?  

If your car is damaged but not written off, you have a few options for what to do next:  

1. Repair the car  
2. Sell the car as is  
3. Trade-in  
4. Scrap the car  

Car written off on finance - The bottom line

Understanding your finance agreement is vital when a car on finance is written off. Review your policy, contact your insurance, and then contact the finance agency. This way, you’ve notified all agencies and can navigate the situation effectively.

Hopefully, we’ve ended your “car on finance written off, not my fault” search. If you need help covering car repair costs, Bumper’s zero-interest credit on car repairs is a great way to spread payments into manageable lumps.  

To get started, enter your reg and postcode to find out where your nearest participating Bumper car repair finance garage is.

Author - Joseph Law

Joseph has been writing about cars for over seven years and writing for Bumper for over two, blending his passion for automobiles with a talent for storytelling.

Joseph has written about engineering and cars for Autozilla, Komaspec, and several engineering manufacturers. When he's not writing or tinkering with one of his five cars, Joseph dreams of owning an Alfa Romeo 33 Stradale.