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"Full compliance with the Salvage Code of Practice is essential"

Phil Gledhill - MVDA seminar
Insurance salvage expert Phil Gledhill explains the issues with the code of practice.
Last month we brought you the potential that the body shop market offers, thanks to a seminar that had taken place and MVDA’s AGM. Here we take a look at the other seminar we mentioned, insurance total loss classification - we are not alone.


We are all too aware of the issues affecting the dismantler surrounding the classification (or should I say mis-classification) of total loss vehicles. You have seen here on atfPro plenty of examples and most of the time we feel we are pushing against a locked door. Every now and then though, you get a glimmer of hope that the door is starting to open!

Phil Gledhill took the seminar. You may not know that name but take it from us, Phil is an insurance industry expert and knows his stuff when it comes to motor salvage. He currently runs a consultancy but in former lives he has been the chief engineer for Norwich Union and was one of the original architects of the Insurance Code of Practice. So to have someone of Phil’s stature from the other side of the fence (so to speak) was a treat for MVDA’s members.

Following the seminar Phil put down in words for members his thoughts on the situation, Below we reproduce the information with kind permission of MVDA who feel that this issue is too important to keep to members only. MVDA have worked hard to move the insurance industry and we should all give them credit for the efforts made. This effort alone is worth the tenner a week subscription! Here is the letter from Phil.

Category A and B Salvage Guidance and the Salvage Code of Practice
During my session at the recent MVDA Seminar there was much interest and concern over the subject of categorisation and disposal of Category A and B salvage, particularly where category B salvage is exported. There was also concern in respect of category B salvage appearing for sale on public auction sites although I explained that insurers do not always have control over the disposal of claim related vehicles. Therefore I wish to explain as follows my own interpretation and views on the subject and the guidance I provide to insurers when such guidance is requested.

Where possible I have provided references for the statements made. Category A and B salvage is hazardous waste and as a producer there are clear Duty of Care responsibilities attaching to the insurer who must ensure compliant and accountable disposal where they dispose of the salvage. The following are key points to consider, not exhaustive, when arranging salvage disposal contracts:
  • Disposal should only be under contract with an Authorised Treatment Facility (ATF). Where a vehicle is damaged abroad exceptional special arrangements may be necessary to ensure its destruction.
  • A contract with an ATF is essential in order to make clear the insurer’s instructions and their joint responsibilities, including the destruction and disposal in accordance with the Salvage Code of Practice.
  • A Certificate of Destruction (CoD) can only be issued by an ATF and should be issued in every category A and B case processed. Where a category C or D vehicle is broken for spares a CoD should be issued. Note: DTI Guidance Notes re ELV Regs 2003, page 2, Regulation 2 - Interpretation: CoDs apply to vehicles not exceeding 3.5 tonnes maximum laden mass, excluding motorcycles – ‘Passenger vehicles above this weight are based upon commercial vehicles and, as such, are considered by the Department to be outside the scope of the Directive’.
    BIS ELV Government Guidance Notes June 2010, page 15, section 60: ‘Once a CoD has been issued for a vehicle, the ATF is responsible for de-polluting and destroying the vehicle. DVLA will not register or license the vehicle again for use, even under a different registration mark, unless in rare and exceptional circumstances’.
    DVLA: INF156 Certificate of Destruction ‘What to do if your vehicle is not covered by the regulations and you would like to scrap it’ – ‘You still need to take your vehicle to an ATF. They will update the vehicle record with a ‘Notification of Destruction’ (NoD)’.
  • When a CoD is submitted by an ATF to DVLA and it is confirmed as approved, this triggers the de-registration of the vehicle from the DVLA register (refer BIS Government Guidance Notes for ELV Regulations June 2010, Section 59) The Government department for Business, Innovation and Skills (BIS) is provided with details of all CoDs issued for purposes of monitoring recycling returns.
  • All insurer sale documentation should include the registration number and VIN (chassis number) and clearly state the salvage category applicable. Cherished number plate transfers must be completed prior to disposal/sale and the DVLA newly assigned registration number used in documentation. The Environment Agency has experienced cases where salvage companies have argued that a category B vehicle on their premises or being transported is repairable salvage not waste, thereby endeavouring to avoid waste regulation requirements.
  • It is strongly recommended that robust audit procedures are put in place by the insurer to ensure compliance with the Salvage Code of Practice and correct disposal. Each CoD has an individual number. Only when a CoD is completed and submitted will DVLA be aware and if approved, erase the vehicle record from further use. The Environment Agency (EA) states in their ‘Position Statement’ that ‘The insurance company should obtain a CoD for each ELV they send for treatment and destruction’.
  • Once cleared/sold by the insurer to the ATF, a CoD should be issued without delay. A CoD may be issued prior to the destruction of the vehicle, the ATF remaining responsible for its destruction.
  • Category B salvage vehicles are attracting high values from overseas buyers where insurer audits to ensure Duty of Care and Salvage Code of Practice compliance can be challenging. However, the risks need to be addressed and can be minimised for the insurer through suitable contract terms and audit requirements with the insurer’s contracted UK ATF(s). This particularly applies to category A and B high value vehicles and flood cases which if not destroyed have serious Health & Safety issues and the risk of body welded sections being made available for the repair of other vehicles. 9. When insurers categorise salvage as category A or B they should expect that vehicle to be destroyed and a CoD issued. Audits should ensure this happens with a CoD number logged against the insurer vehicle file and an audit sample made of CoD certificates issued. It is appreciated that insurers do not have control over the disposal of salvage in every case for example where retained by the owner or with third party claims where the owner has the right to retain the salvage.

However, it is of concern that category B cases are appearing on public auction websites such as Ebay and when speaking with the Environment Agency they advised that there are some concerns with the export and transportation of category B salvage. They also stated that ‘There continue to be instances of some businesses arguing that particular Cat B vehicles are not waste’. It was mentioned to me only last week that some overseas border agencies are now turning back salvage which does not have the required paperwork or a vehicle registration document. Full compliance with the Salvage Code of Practice is essential if the safe and responsible management of salvage is to be achieved. This particularly applies to the application of the correct salvage category which dictates the process to follow and the destiny of the vehicle. The ETC (previously ETS) Guidelines provide further detail and clarification of the interpretation of the Code, if required.

However, it is of concern that category B cases are appearing on public auction websites such as Ebay and when speaking with the Environment Agency they advised that there are some concerns with the export and transportation of category B salvage. They also stated that ‘There continue to be instances of some businesses arguing that particular Cat B vehicles are not waste’. It was mentioned to me only last week that some overseas border agencies are now turning back salvage which does not have the required paperwork or a vehicle registration document. Full compliance with the Salvage Code of Practice is essential if the safe and responsible management of salvage is to be achieved. This particularly applies to the application of the correct salvage category which dictates the process to follow and the destiny of the vehicle. The ETC (previously ETS) Guidelines provide further detail and clarification of the interpretation of the Code, if required.

December 2013

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