Insurance and salvage loopholes must be closed to stop car theft, experts say

Rules that set out how written-off cars should be dealt with need toughening up as criminal gangs are stealing cars for parts to repair crash-damaged vehicles bought at a salvage auction, according to insurers.

Last month, Auto Express exclusively revealed how cars that had been bought from salvage auction as write-offs following serious accidents were passing the background checks offered by HPI and Experian.

• Keyless theft sees car theft insurance payouts surge by 29 per cent

The Association of British Insurers (ABI) has said that in many instances such cars will be bought from salvage auction by criminal gangs, who will steal an identical car in order to gain the parts necessary to repair the written-off cars. These vehicles, the ABI says, become “Frankenstein cars”, meaning their original identity remains intact, despite the fact a significant proportion of their parts will have been taken from stolen cars.

Industry experts who have contacted Auto Express following our write-off expose say a modern airbag system, for example, will typically be activated during a serious accident and need replacing before the car can be put back on the road. But a brand-new system airbag system costs around £3,000, meaning criminal gangs will steal an identical ‘donor’ car before stripping it for parts. The same principle is true for replacement bumpers, body panels and other parts. 

The Association of British Insurers has identified six loopholes within the salvage and used-car industry that need closing in order to crack down on car crime, namely:

1. Salvage yards accepting cash

One of the biggest salvage auction companies, Copart, accepts cash payments of up to £8,000 per customer, per day. Yet another salvage auction company, Synetiq, stopped accepting cash payments altogether in March 2019 after listening to concerns from West Midlands police that explicitly linked criminality and stolen cars to the practice of buying written-off cars for cash. 

2. No official checks for written-off cars 

Cars written off by insurance companies used to have to go through a Vehicle Identity Check (VIC) before they could be put back on the road if they were judged as a ‘Cat C’ write off. While this check wasn’t specifically designed to determine of they had been properly repaired, inspectors would issue a prohibition notice if the dangerous faults were noticed.  The VIC scheme ended in October 2015 and write-offs now only need to have a valid MoT before they can be driven again.

3. Write offs don’t even need a fresh MoT

The Association of British Insurers says Cat N and Cat S write offs don’t even need a to be put through a new MoT before they can be driven again, with their MoT remaining valid despite the cars having been written off by insurers.

4. Deficiencies in the process for obtaining duplicate or replacement logbooks potentially enabling criminals to easily “clone” a vehicle’s identity

While not made explicit by the ABI, these deficiencies may be linked potential weaknesses surrounding the 11 or 12-digit Document Reference Number contained on a car’s V5C logbook, which can be entered into the DVLA’s online ownership tool as part of the change of ownership process.

5. Weaknesses in online notification processes of changing registered keepers of vehicles

Auto Express has been in conversation about the Driver and Vehicle Licencing Agency (DVLA) about potential loopholes in the system for changing ownership of cars. If someone owns a car, and someone else illegitimately applies for a change of ownership and new logbook for their vehicle, the legitimate owner will be alerted to this fact by a letter DVLA sends to them. If, on the other hand, a vehicle is sold to a motor trader, the car is effectively in ownership 'limbo', and the DVLA says: “When the vehicle has been passed to Trade it is legally without a registered keeper so no such ‘alert’ is sent.”

6. The lack of a sufficiently robust ‘know your customer’ and ID verification process at vehicle salvage auctions

This should be considered in conjunction with the cash payments accepted by many salvage auctions.

Highlighting these issues, James Dalton, the ABI’s director of general insurance policy, said: “Criminal gangs are buying up damaged cars from salvage auctions and then stealing cars to order, for the parts they need to fix them, which are then sold for a hefty profit.” Dalton added that the insurance and salvage industries should work together to close “loopholes that unscrupulous parties”.

Dalton added, though, that the public “have an important role to play”, and “motorists should be wary of buying second-hand cars that are much cheaper than might reasonably be expected.”

The ABI is also keen to move the Salvage Code of Practice, which was updated in 2017, “onto a regulatory footing” – meaning the Code could become mandatory, rather than voluntary.

Have you ever bought a car that was previously written off? Let us know in the comments below...