Sadie Ann Jane McGrady

ABI

51 Gresham Street, London EC2V 7HQ  Tel: 020  7600 3333  Fax: 020 7696 8999

Director General

John Gittins
HM Coroner
Coroner’s Office
County Hall
Wynnasty Road
Ruthin
LL15 1YN

Dear Mr Gittins

9 October 2013

Re:  Report  for  the  prevention  of  Future  Deaths: Inquest  of  Sadie  McGrady -  13th
August 2013

Thank  you for your letter of 15 August in which you raised some important  points about
the  repair  and  sale of vehicles that  have previously been  written-off. We  comment  here
on the general issues you have raised as we are not in a position to offer any comment
on the particular and tragic case to which your enquiry relates.

The insurance industry has collaborated with a number of stakeholders in recent years to
provide  guidance  on  the  steps  to  be  taken  on  the  treatment  of  total  loss  (sometimes
referred to as written-off) vehicles. In 1996, the ABI, along with other bodies including the
British  Vehicle  Salvage  Federation  (BVSF),  the  Motor  Vehicle  Dismantlers  Association
(MVDA)  and  the  Association  of  Chief  Police  Officers  (ACPO)  drew  up  the  Code  of
Practice for the Disposal of Motor Vehicle Salvage. I have enclosed a copy of this Code
for  your information.  The  ‘Salvage  Code’  aims to  bring  consistency to  the  way insurers
and  their  salvage  agents  classify  damaged  vehicles,  ensuring  that  badly  damaged
vehicles do not return to the road.

When an insurer decides that a car is a total loss, it can fall into four categories (A,B,C or
D)  which  broadly reflects  decreasing  severity of the  damage to  vehicles: In  the  case  of
categories  A  and  B,  the  Code  provides  that  vehicles  should  always  be  scrapped  and
never returned to the road for safety reasons. Vehicles in category C and D are known as
economic  total  losses.  Category  C  and  D  vehicles  are  repairable  but  the  insurer  can
decide  that  the  vehicle  should  be  classified  as  a  total  loss  given  that  the  repair  costs
exceed  the  vehicle’s  pre-accident  value. There  may  be  other  considerations  an insurer
may  take  into  account including  the  cost  of  a hire  car that  needs  to  be provided  to  the
policyholder. It  therefore makes  economic sense for the insurer to  pay  the  policy-holder
the  amount  the  vehicle  is  worth.  The  vehicle  involved  in  the  crash  that  resulted  in  the
death of Sadie McGrady was classified as category D salvage, meaning it could return to
the road pending suitable repairs.

Once the vehicle is declared a total-loss and payment has been made to the policyholder,
the insurer becomes the legal owner of the vehicle. The insurer may then decide to repair
the  vehicle  and  sell  it  or  sell  it  in  its  current  condition  to  a  garage  who  will  carry  out 
repairs. When  an insurer takes  ownership of the  vehicle, they will inform the  DVLA that 
the vehicle has been involved in a crash, a requirement that is part of the Vehicle Identity 

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 Check (VIC) Scheme. This  is  a note which  is added to the  DVLA computer record and
as  long  as this  note  remains  on the  vehicle  record, DVLA  will  not  issue  a  replacement
Registration Certificate. The marker is removed when the car passes a VIC. This means
that  its  identity  has  been  confirmed  by  the  Vehicle  and  Operator  Services  Agency
(VOSA).  The  scheme  was  originally  designed  to  prevent  ‘ringing’  a  practice  where  a
stolen  car  has  its  identification  numbers  replaced  by  a  set  from  another  vehicle  which
effectively changes the car’s identity. There is, at present, no requirement for Category D
vehicles to  be notified to the DVLA  database via the VIC  scheme,  although insurers do
upload their details to the Motor Insurers Anti-Fraud and Theft Register (MIAFTR).

Apart  from  an  MOT,  there  are  no  mandatory  checks  required  on  the  quality  of  repairs
carried out on previous total-loss vehicles. The current advice for buyers of all used cars
is  to  check the  vehicle’s history  via  one of  the  widely available vehicle history  checking
services  such  as  HPI  and  those  provided  by  the  AA  and  RAC.  These  online  services
interrogate  MIAFTR  which  is  used  to  upload  the  details  of  vehicles  which  have  been
declared a total-loss to the DVLA database. In addition, it is recommended that potential
buyers seek the advice of independent engineers prior to agreeing to the purchase.

In recent months we have been working with the Department for Transport to review the
VIC scheme. We have suggested that vehicles that have sustained structural damage (as
opposed to  cosmetic  damage)  undergo  an  ‘enhanced’ VIC  where  the  vehicle  inspector
will  not  only  check  the  vehicle’s  identity  but  also  the  paperwork  associated  with  repair
work undertaken. In reality, the only failsafe way to verify that structural repairs have been
carried  out  correctly  is  to  either  dismantle  the  vehicle  completely  (which  is  likely  to  be
prohibitively  expensive  for  most  consumers)  or  to  put  the  vehicle through  a  crash  test
which would obviously undermine the purpose of the consumer buying the vehicle in the
first place). However, we think that an enhanced VIC will encourage a greater awareness
within  the  industry  of  the  need  to  ensure  that  all  repairs  are  carried  out  to  appropriate
standards.

Over  the  coming  months  we  will  be  working  with  the  Department  for  Transport,  VOSA
and the DVLA to review the current VIC scheme to include the additional check we have
proposed.  We  would  be  more  than  happy  to  provide  you  with  further  details  once  we
know  the  outcome  of  our  on-going  discussions.  In  the  interim,  we  have  written  to  ABI
member firms reminding them of the importance of the Salvage Code and the steps they
should take to ensure compliance within it.

In light  of the focus  in your report  on questions about the quality of  repairs,  we suggest
that  you also approach the Vehicle Builders and Repairer’s Association and the National
Association of Bodyshops who may be in a position to disseminate your concerns to their
respective members and seek further responses.

Director General

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 CODE OF PRACTICE FOR THE DISPOSAL
OF MOTOR VEHICLE SALVAGE

March 2007

INTRODUCTION

This Code of Practice has been produced by and is supported by the Association of British Insurers (ABI), Lloyd's Market Association
(LMA), British Vehicle Salvage Federation (BVSF), British Vehicle Rental and Leasing Association (BVRLA), Motor Vehicles Dismantlers
Association (MVDA), the Association of Chief Police Officers (ACPO) / Association of Chief Police Officers Scotland (ACPOS), Trading
Standards Institute, the Home Office (HO), the Department for Transport (DfT), the Driver and Vehicle Licensing Agency (DVLA),
Driver and Vehicle Licensing Northern Ireland (DVLNI)1 and the Vehicle Operator and Services Agency (VOSA).

This Code gives advice on the steps to be taken in the treatment of vehicle salvage and recovered stolen vehicles.  The categorisation
and notification of salvage as set out in this Code will make it difficult for criminals to ring vehicles (illegally changing the
identification of a stolen vehicle) or return dangerously repaired vehicles to the road. The purpose of the Code is to detect and deter
insurance fraud and the above-mentioned criminal activities and to make vehicle histories much more transparent.

The Code seeks to encourage best practice.  However, adoption by supporters and their members of any terms, standards, guidance,
recommendations or similar statement contained in this document is voluntary and entirely at the discretion of each individual
member.

CATEGORISATION OF VEHICLE SALVAGE

Four categories of vehicle salvage have been defined. Details are given of the steps to be taken in advising DVLA and MIAFTR on each
category, together with the consequential effects on action taken by the police, VOSA, vehicle data agencies and other interested
organisations.

The inspecting insurance staff or independent engineer must decide to which of the four categories a particular item of salvage
belongs, using current ETS (Engineer Technical Sub-committee) Guidelines.  Other than to correct inputting errors, data should not
be removed from MIAFTR. Recategorisation may only be effected in exceptional circumstances (see Changes in salvage categories
below).

DISPUTES
1.  In the event of a dispute between the insurer2 and the salvage agent regarding categorisation, the matter should be referred to a

senior engineer nominated by the insurer.

2.  Where two  MIAFTR entries have been made by different insurers in respect of the same vehicle/incident, the entry made by the

insurer that settles the claim should take precedence.  However, where duplicated entries indicate different salvage categories,
the insurer awarding a more severe salvage category is entitled to seek substantiating evidence (from other interested parties as
appropriate) before removing their MIAFTR entry.

DVLA NOTIFICATION AND  MIAFTR

A MIAFTR entry must be completed in respect of all total loss vehicles, indicating salvage categories (A, B, C or D as appropriate) as
soon as reasonably practicable.  Completing a MIAFTR entry meets the regulatory requirements for insurers to notify DVLA under
the Road Vehicles (Registration and Licensing) Regulations 2002.

It is essential that notifications to MIAFTR are made properly and that amended/updated information is fed through as soon as is
reasonably practicable.

DEFINITIONS

Throughout this Code all references to ’Salvage Disposer’ shall be deemed to include members of any of the supporting organisations
that dispose of salvage, including insurers and their agents, self-insurers and their agents and associated companies.

VIC -  a Vehicle Identity Check.  Since April 2003, all cars and certain light vans categorised as A, B or C require a VIC before a V5C
registration certificate is re-issued by DVLA. The check is carried out by the Vehicle Operator and Services Agency (VOSA).

Note that terminology in this Code may differ for Northern Ireland.
Or 'self-insured' throughout this Code as appropriate.

 Category A

Category B

Category C

Category D

Definition

SCRAP only (i.e. with
few or no economically
salvageable parts and
which is of value only
for scrap metal)
e.g. total burnouts

BREAK for spare parts
if economically viable
(excluding any residual
scrap value).

REPAIRABLE total loss
vehicles where repair
costs including VAT
exceed the vehicle’s
pre-accident value
(PAV).

REPAIRABLE total loss
vehicles where repair
costs including VAT do
not exceed the vehicle’s
PAV.

Salvage disposers should use best endeavours to
ensure that Category A and B vehicles do not
reappear on the road.

Vehicle
Registration
Certificate (V5C)

It is the responsibility of the registered keeper to notify DVLA when a vehicle is passed to an insurer
following a total loss payment

Where the insurer takes title to the vehicle, the registered keeper may authorise the insurer to act as
its agent in notifying DVLA.  However, the insurer must notify the DVLA, using the appropriate
section of the V5C, without delay.  If this action is not taken, the registered keeper will still be liable
for the vehicle under the Continuous Registration requirements of the Road Vehicles (Registration and
Licensing) Regulations 2002 and could incur a fine.

Where the Salvage Disposer is disposing of the salvage, the remaining parts
of the V5C must be securely destroyed.

Where the Salvage
Disposer is selling or
transferring ownership
of the vehicle, the
remaining parts of the
V5C must be passed
to  the salvage agent/
new owner.

Where vehicle salvage is retained by the owner/registered keeper and
subsequently sold on, they should be made aware by the insurer that the
vehicle may have to undergo a VIC test before a replacement V5C is issued
by DVLA. The V5C must be returned if it has been provided to the insurer for
scrutiny prior to claims settlement.

Recovered
stolen vehicles

Recovered stolen vehicles which are in a total loss condition must be categorised A, B, C or D as
appropriate.

Recovered stolen vehicles that are undamaged, or with only minor damage, must be notified to MIAFTR
as recovered. The record must not be deleted.

Any changes in a total loss category must be notified to MIAFTR as soon as reasonably practicable on
re-classification.

Changes in
salvage
categories

Any changes in a total loss category must be notified to MIAFTR and to any party to whom the affected
vehicle has been transferred as soon as reasonably practicable following re-classification. Where the
vehicle no longer falls within any of the Categories A, B, C or D, DVLA should be notified in writing.
Such a communication should include the claim reference number, Vehicle Registration Mark, Make and
Model, Vehicle Identification Number (if available) and the date of accident.  Insurers should allow a
minimum of 48 hours to elapse after updating MIAFTR before raising any related enquiries with DVLA.

Database
notifications

All notifications to MIAFTR whether indicating theft or damage are passed to vehicle data agencies for
a finance check. The data agencies use the information to provide a vehicle check service to the motor
trade and the public.  It is essential that loss information on MIAFTR is accurate and up to date.

Documentation

All Salvage Disposer documentation to salvage agents in respect of individual items of salvage must
categorise the salvage as either A, B, C or D.

Salvage agents must maintain proper records in accordance with BVSF requirements (where applicable)
and the Motor Salvage Operators Regulations 2002 so that an effective audit trail of purchases and
disposals exists.  Premises and records will be accessible to police.

Salvage agents will record the identity of all vendors and purchasers of salvage. In the case of
non-insurer vendors and purchasers, proof of identity will be required.

 Responsibilities
of the primary
salvage agent in
the treatment of
salvage/vehicles

ELV and
Certificates of
Destruction.

Category A

Category B

Category C

Category D

Where salvage is being disposed of by a member of a supporting organisation

May be sold on.  When any vehicle is broken for
spares, the criteria for category B apply.

When any vehicle is broken for spares, the criteria
for category B apply.

SALVAGE MUST BE
CRUSHED.
The vehicle
identification number
(VIN) plate and visible
VIN must be removed
at the earliest possible
opportunity and either
held in secure storage
whilst awaiting disposal
or securely disposed of.
The stamped in VIN
must be left in situ
and not  interfered
with in any way.

Category B must be
treated as Category A
once reusable parts
have been removed.

THE BODYSHELL/
FRAME/CHASSIS
MUST BE CRUSHED.

Air bags and seat belt
components must be
properly disposed of
in accordance with the
manufacturer's
instructions - these
items must never be
re-sold.

All registration plates must be immediately
covered and, as soon as reasonably practicable,
removed and securely destroyed.

All tax discs (including those expired and those
still valid but with less than a month to run) must
be removed and securely stored or destroyed.

Any vehicle designated end of life shall be treated
in accordance with the End-of-Life Vehicles
Regulations 2003.  Vehicles within scope (cars,
light vans and 3 wheelers excluding trikes) must
be issued with a Certificate of Destruction.  A
Notification of Destruction (V860) will only be
issued for vehicles outside scope e.g. HGVs and
motorcycles.

Identification marks on engines and any other
salvaged parts must not be erased. Copies of
V860s must be retained by the salvage agent for
a period of at least 6 years for audit purposes, or
such other period as defined in the Motor Salvage
Operators Regulations 2002 or any subsequent
amendments.

Note 1

Note 2

Note 3

Note 4

Note 5

Note 6

It is for the inspecting engineer to determine, given the specific circumstances such as type of water
(fresh, contaminated or salt), depth of submersion etc, whether a vehicle should be categorised A, B, C
or D or not classified.

All bodyshells other than those on Category C and D salvage, or bodyshells the subject of replacement
in service, must be crushed.  (NB Special arrangements may apply to manufacturers' bodyshell
schemes.)

Salvage Disposers are strongly encouraged to utilise only the services of those salvage agents who
comply with the appropriate provisions of the Environmental Protection Act 1990 and the Motor
Salvage Operators Regulations 2002.

Third party total losses should be categorised A, B, C or D, and a MIAFTR entry made.

Salvage Disposers should use their best endeavours to assume responsibility for the disposal of all
categories of salvage, whether first or third party claims.

For the purposes of establishing whether Category C or D applies to repairable salvage, both repair cost
and pre-accident value should be inclusive of VAT.

 CODE OF PRACTICE FOR THE DISPOSAL
OF MOTOR VEHICLE SALVAGE FLOWCHART
FOR CATEGORISING VEHICLES

Is the  damage sufficiently severe to  warrant
settlement on a total loss, constructive total loss
or vehicle replacement basis in accordance with
the code?

NO

YES

CODE OF PRACTICE
DOES NOT APPLY

Insurance repair cases
Stolen and recovered undamaged
or minimal damage (after the
claim has been settled)
Vehicles which are not repaired for
other commercial reasons

Can/should the vehicle be repaired?

NO

YES

T

Does the vehicle contain any parts that  are
economically viable for resale?

Do repair costs including VAT exceed PAV?

NO

YES

J

CATEGORY A

CATEGORY B

CATEGORY C

Vehicles which
can/should be
repaired

(cid:127)  Extensive

damage with
no economically
salvageable parts

(cid:127)  Total burnouts
(cid:127)  Old, low

value damaged
vehicles with
no economically
salvageable parts
(cid:127)  Scrap value only

(cid:127)  Vehicles which
should not  be
repaired

(cid:127)  Heavy damage,
chassis bent
(cid:127)  Old, low value

vehicles beyond
any form  of
economic repair

NO

T

CATEGORY D

(cid:127)  Vehicles

replaced under
"new  for old”
schemes (say,
60%  damage)
which would not
otherwise have
been treated as
total losses
(cid:127)  Constructive
total losses

* See Engineer Technical Sub-committee Guidelines

Department
for Transport

John A. Gittins H.M. Coroner
H.M. Coroner’s Office
County Hall
Wynnstay Road
Ruthin
LL15 1YN

Freight, Operator Licensing and
Roadworthiness Division
Department for Transport
Great Minster House
33 Horseferry Road
London
SW1P4DR

9 October 2013

Dear Mr Gittins,

Re. report for the Prevention of Future Deaths
Inquest of Sadie McGrady -  13th of August 2013

I am writing in reply to your letter of 16th August to my colleagues at VOSA and DVLA as
the policy lead for the Vehicle Identity Check (VIC) Scheme.

The Vehicle Identity Check Scheme was set up in 2003 following the introduction of the
Vehicles Crime Act 2001. The purpose of the VIC scheme is to deter the crime of vehicle
ringing. Typically, this involves the theft of a car of significant value, which is then given
the identity of a similar car (make, model, colour etc) which has been the subject of an
insurance write-off. The written-off car is obtained cheaply; its identity (Vehicle Identity
Number (VIN) and Vehicle Registration Mark (VRM)) is then transferred to a higher value
stolen car which, now apparently genuine, can be sold at market price.

At present, insurers log details of all written-off vehicles (approximately 385,000 vehicles
per year) according to 4 salvage categories (A -  scrap only; B -  break for spare parts; C
-  repairable total loss where repair costs exceed the vehicle pre-accident value; D -
repairable total loss where repair costs do not exceed the vehicle pre-accident value), and
pass the information to the Driver Vehicle Licensing Agency (DVLA). The VIC scheme
applies to salvage categories A, B and C; for these vehicles to be issued with a
replacement Vehicle Registration Document (V5C) or licensing reminder (V11), they must
undergo and pass a VIC check conducted by VOSA, which ensures the vehicle examined
is the vehicle which had been written off.

About 75% of the checks that have been undertaken on cars which were 7 years or older
were written-off because the cost of even small repairs was greater than the very low
market value of the vehicle.

 The Scheme, however, was never intended for the purpose of checking the
roadworthiness of repaired written-off vehicles.  If examiners identify any obvious
roadworthiness defects on vehicles being VIC tested they can only bring them to the
attention of the presenter.  The VIC inspection is limited only to those features relating to
the identity of the vehicle.

As stated in your report, the vehicle in question was not required to undergo a VIC check,
as it was classed as a Category D.

Proposed European directives, which form the basis of domestic legislation around MOT
inspections, could in future allow Member States to mandate the technical inspection of
vehicles following extensive repairs.  The current Roadworthiness Proposal also states
that Member States may examine vehicles “after an accident with serious damage to the
main safety related components of the vehicle such as wheels, suspension, deformation
zones, steering or brakes,... “.  If this option became European law the UK Government
could choose to transpose it into domestic legislation, following rigorous impact
assessment.

However, the inspection of repaired, seriously damaged vehicles using the MOT system,
would be limited to a visual check only and would not be able to inspect the integrity of
welded structural repairs if they were obscured by sealant, mastic,  trim, lining, carpets or
other components (dismantling for MOT purposes is not permitted).  Therefore, as
mentioned in your report, it is unlikely that a standard MOT inspection would have
detected a problem with the car in this case.

However, the Department for Transport are currently reviewing the Scheme1, analysing
ideas put forward during the Consultation. Should the Ministers decide to amend the
scheme, feasible options will be subject to further consultation. Due to legal processes
and Government priorities, the earliest the changes could be brought into scope would be
2015.

Yours sincerely,

1 https://www.qov.uk/qovernment/consultations/future-of-the-vehicle-identity-check-vic-scheme