Car Write Offs

Reporter: Laura Sparkes

Inside a damaged car auction; tens of wrecked cars lined up one after the other. Each week thousands are sold across the country, Cars so unsafe, they should only be sold as spare parts... ending up back on the road.

"You go out to the auction houses and you have a look at the vehicles that the insurance companies have deemed as repairables and you know damn well that they're not and I really worry about the future of that vehicle and some unsuspecting family putting their kids in it" says Gerry.

Smash repairer Gerry Raleigh has had enough. After being in the repair industry for 30 years, he's blowing the whistle on a hidden agenda of insurance companies.

"A repairable write-off is basically one the insurance company puts through to resell to put back on the road... if its a stat write-off that goes for parts only, a repairable write-off brings a better dollar because somebody is going to buy it and put it back on the road" explains Gerry.

Insurance companies have criteria that determine if a car should be a statutory write-off including major damage to the roof, floor, firewall, suspension damage or major mechanical damage... a repairable write-off on the other hand ...only has minimal structural damage and is deemed safe enough to drive... if repaired.

"An average car say a Commodore, it might be $5000 for a wreck for whatever parts are still marketable on it, a repairable write-off it could go for 10 or 15 thousand dollars depending on how late the vehicle is and what options it has on it" says Gerry.

So its in the insurance cos financial interest to sell it as a repairable write-off?

"Most definitely there's millions and millions of dollars difference each year that the insurance companies recoup by substituting a repairable write-off for a statutory write-off" answers Gerry.

Gerry is part of a group of repairers fed up with the system.

"A lot of repairers have arguments with the insurance companies saying this is a statutory write-off, I see them loaded on the back of a truck and go and I know whats going to happen to them, I know where they're going and here's another one thats going to hit the roads."

Today Tonight visited a damaged car auction this week with Gerry. It took less than an hour to find at least 4 cars deemed repairables... wrecks that the experienced repairer believed should have been statutory writeoffs ..only to be sold for spare parts.

"They only care about their bottom line, at the end of the day thats what this issue is about, the insurance companies bottom line and they don't take any account of the safety issues" says James McCall.

As Chief Executive Officer of the MTA, the Motor Traders Association of NSW, James McCall believes this dangerous insurance company practice sustains dodgy backyard operators.

"When a backyard repairer gets hold of a repairable writeoff they will repair the vehicle cosmetically so it looks good to the average eye of the consumer but underneath structural damage will still be there" says James.

So what does that mean to us? ...just ask Bruce Daniels, Romel Khoshaba or Darren and Kylie Kline.

All three bought cars experts say should never have gone back on the road. Romel knew this BMW was a repairable write-off. He bought it for $4000 at a damaged car auction. A repairer quoted $3000 to fix it, Romel thought he'd then have a safe luxury car.

"When I picked up the car form the repairers it just didn't look right and I drove it out I noticed it was all over the road and it made a bit of a noise from the back" said Romel.

The car's now been structurally tested and measured by Tony Murdacca who's convinced Romel's car should have only ever been sold for spare parts.

"It would crabwalk down the road, it would leak fumes into the cabin, the doors don't seal, its still a structural write-off nothing has changed" explains Tony.

Darren Kline's second hand Nissan Patrol broke down soon after he bought it. His repairer told him the car was structurally unsafe. They've since found out the previous owner Brett Maslin was involved in this accident. The car was written off and sold at a Queensland auction as a repairable writeoff. It ended up in Sydney where the Kline's bought it.

"I can't fathom how that car is driven again at all knowing the damage down" says Brett Maslin.

Bruce Daniel started worrying about his newly purchased second hand car when a part fell off! He immediately had it inspected by a reputable repairer Sid Bush.

"The chassis was bent, there was parts left off, they had moved parts forward so that they could align it in some sort of fashion, the suspension was bent there was major mechanical repairs needed... realistically it should have been a stat writeoff" explains Sid.

Bruce eventually discovered the car was sold as a repairable writeoff in Melbourne then cosmetically repaired in Sydney and sold to Bruce. He's since spent another $5000 to make it safe.

There's 160,000 writeoffs sold in damaged car auctions around the country every year so it makes you wonder, how many people are injured or actually die because they're driving a stat writeoff, a car that under the legislation should have been sold for spare parts but because insurance companies are more interested in their bottom line than our safety, its put back on the road.

The MTA believes many accidents and injuries occur each year due to statutory writeoffs getting back on the road.

"If theres a serious accident with a vehicle thats been put back on the road and it is unsafe, theres no way of telling whether the vehicle was rendered unsafe in the accident that its just been in or a previous accident that cause it to be written off the insurance comapnies know this they" says James.

He believes the only way to stop insurance companies is to change the legislation.

"We believe all written off vehicles should be stat writeoffs they should go into parts, it would resolve the safety issue. We believe the saving of life would run into dozens and we believe that accidents would be reduced by 100s across the nation" says James.

Writeoff regulations are administered by the Roads and Traffic Authorities in each state. The Federal Transport Minister's office believes the issue isn't high on the list of concerns.

"The insurance company have got an army of spruikmen that go around and try and convince government that everything they do is absolutely wonderful and there seems to be a reticence in government to stand up to the insurance industry" says James.

The Insurance Council of Australia refused an interview. As did Australia's biggest car insurer conglomerate the Insurance Australia Group. So what can consumers do for protection? Get a structural inspection.

"Its not too expensive, under $200 you get your vehicle inspected and you will know then everything about the vehicle" says James.

In 2010 the national wrecks register will be launched...but until then consumers have to physically ring the Roads and Traffic Authority in each state to check if a second hand car they want to buy is a writeoff.

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