Dear Mr Gittins 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 IE

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

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.

Category A Category B Category C Category D Responsibilities of the primary salvage agent in the treatment of salvage/vehicles Where salvage is being disposed of by a member of a supporting organisation 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. May be sold on. When any vehicle is broken for spares, the criteria for category B apply. 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. ELV and Certificates of Destruction. 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. When any vehicle is broken for spares, the criteria for category B apply. 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 CODE OF PRACTICE DOES NOT APPLY YES 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 YEST Does the vehicle contain any parts that are economically viable for resale? Do repair costs including VAT exceed PAV? NO NO YES T J CATEGORY D CATEGORY C CATEGORY B CATEGORY A Vehicles which can/should be repaired
• Vehicles replaced under "new for old” schemes (say, 60% damage) which would not otherwise have been treated as total losses
• Constructive total losses
• Vehicles which should not be repaired
• Heavy damage, chassis bent
• Old, low value vehicles beyond any form of economic repair
• Extensive damage with no economically salvageable parts
• Total burnouts
• Old, low value damaged vehicles with no economically salvageable parts
• Scrap value only
* See Engineer Technical Sub-committee Guidelines

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.