More than 10,000 flood-damaged cars will be written off by insurers

Friday, 24 February 2023

A high proportion of flood-damaged cars are written off.

Turners expects insurers to write off about 10,000 cars damaged in the Auckland floods of late January and by Cyclone Gabrielle.

Chief executive Greg Hedgepeth said that figure was a best estimate, but it did not include uninsured vehicles.

The Insurance Council of New Zealand Te Kāhui Inihua o Aotearoa said about 90% of vehicles were insured, but one in 10 car insurance policies were only third-party, fire and theft policies, which did not cover flood damage.

“The big unknown is the cars that are not insured,” Hedgepeth said.

* Insurers State, AMI and NZI have now logged 21,000 claims from January flooding

* Warning to car buyers to look out for flood-damaged cars

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Turners handled around half of the insurance write-off market under contracts with Suncorp (owner of Vero and AA Insurance), Tower, and some other smaller insurers, Hedgepeth said.

“We believe that there’s 5000 or so that are likely to come our way.”

A high proportion of flood-damaged cars were written off, he said.

IAG’s write-offs are handled by Turners’ rival Manheim.

Tower motor assessing managing Richard Housham inspects a vehicle at Tower’s triage and assessment yard, operated by Turners at Wiri after the Auckland floods.

Speaking on Friday, an IAG spokesperson said its insurance brands, AMI, State and NZI had received 4903 vehicle claims so far from the recent floods and Cyclone Gabrielle.

That number included both private and business vehicles, she said.

“Of these claims we estimate that 85% will be a total loss,” she said.

AA Insurance, which is partly-owned by IAG rival Suncorp, had 2450 motor claims as a result of the Auckland flooding and Cyclone Gabrielle.

“For the Auckland Anniversary floods, around 75% of vehicles have been written off resulting in a payout, or offer of a payout, being made to the customer,” an AA Insurance spokeswoman said.

“This is due to flood damage deeming the vehicle unrepairable and unsafe,” she said.

For Cyclone Gabrielle, 45% of cars assessed had been written off so far.

When a car is written off, and a claim paid to a policyholder, the car becomes the property of the insurer. The insurers contract companies like Turners to handle the disposal of the vehicles.

Private and business vehicles were damaged in the Auckland floods and by Cyclone Gabrielle.

Turners holds online auctions for written-off cars, and buyers include companies that buy them to strip them of parts.

However, Hedgepeth said a large proportion of flood-damaged cars would just be shredded.

Written-off cars are deregistered, and entered onto the New Zealand Transport Agency Waka Kotahi damaged vehicle database.

A Waka Kotahi Transport Agency spokesperson said on Friday thatbetween February 1 and February 24, 567 water and fire-damaged vehicles were added to the damaged vehicle register, and another 317 had been notified, but were waiting to be processed and added to the list.

“We expect this list to increase over the coming weeks as more vehicle owners contact their insurer, and insurance assessors work through the growing number of claims being received,” she said.

Cars that are written off could be repaired, but Hedgepeth said there was a stringent process to ensure they were safe.

Car dealers are required under the Fair Trading Act to tell prospective buyers if a car has ever been written off, and if they don’t, they face being hauled in front of the Motor Vehicles Disputes Tribunal.

In December, You-Cars Limited was the latest in car dealer ordered to take back a car it had sold to Troy Scarlett without revealing it was a former insurance write-off, and pay him $54,284.

The dealer argued it did not have to tell buyers cars were former insurance write-offs unless they asked.

But Wellington tribunal adjudicator Jason McHerron said “You-Cars had a proactive obligation to disclose all material facts in relation to the vehicle, including that it had been written-off”.

By not telling Scarlett the car was a former insurance write-off, You-Cars had engaged in misleading and deceptive conduct, Mc Herron said.

The Insurance Council has issued a warning about the risk of uninsured water-damaged cars being offered for sale privately to unsuspecting buyers.

It urged buyers to look for signs of water damage, and to check Waka Kotahi’s written off vehicle register when buying a vehicle.