Vehicle disposal firm Universal Salvage is warning insurers they need to crack down on "ringers" - criminals who put write-offs back on the road - if the number of accidents on Britain's roads is to be reduced.
The company has produced a Car Categorisation Guide to help insurers identify potentially dangerous cars.
There is currently a loophole in the law that allows the Driver Vehicle Licensing Authority (DVLA) to issue duplicate V5 log books without registration documents.
Universal Salvage director Ian Gaskin said: "The DVLA's willingness to issue replacement V5s is a vital part of the system that, as it stands, makes dubious practices too easy.
"We want concerted action by the government, insurance companies, salvage operators and vehicle repairers to close all the loopholes."
The guide has been created with the help of the Association of British Insurers' (ABI) Code of Practice on classifying damaged vehicles.
It uses a simple formula to determine if a vehicle is economical to repair.
In January 2002, a new law will come into play which means insurers will be responsible for the disposal of "hazardous waste" - abandoned vehicles and write-offs.
Universal Salvage business development manager Barrie Hobbs said:
"We very much doubt whether some of the firms contracted by insurers for these tasks have a waste carriers licence or the necessary facilities and accreditation. That's why we are highlighting the issue now."