The guide below is based on the Insurance Bureau of Canada’s guidance on repairs, replacements and write-offs, including how salvage value factors into the write-off decision. We examined the OPCF 43 (Waiver of Depreciation) endorsement and its three payout benchmarks.
What Happens If Your Car Is Deemed A Write-Off?
- An appraiser from your car insurance company will compute how much your vehicle was worth before the accident. This value may have declined due to depreciation, one of the hidden costs of car ownership.
- Ontario doesn’t legislate a fixed write-off threshold. Each insurance company sets its own threshold based on repair costs, the vehicle’s actual cash value and expected salvage value.
- The insurer decides if your car will be written off or repaired.
- If your car is still worth repairing, your car insurance policy will be used to cover the cost of repairs. However, if the estimated cost of repairs plus the salvage value exceeds your car’s pre-accident cash value, it may be written off.
- If your car is deemed a write-off, your car insurer will give you a settlement based on the car’s cash value.
After your damaged car is written off, it may be branded “irreparable” or “salvage.” Irreparable cars can never be repaired and driven on the road—they can only be used for parts. Salvage cars need repairs and inspection before they can be allowed on the road again.
In Ontario, the Ministry of Transportation assigns these brands under its vehicle-branding program and the Highway Traffic Act.
A salvage-branded vehicle must pass a structural inspection and be re-registered as “rebuilt” before it can legally return to the road.
What You Can Do If Your Car Is A Write-Off
You can dispute your insurer’s assessment of your vehicle’s damage and its cash value. Your insurer should explain why it considers the vehicle a write-off and how it arrived at the vehicle’s cash value.
How Does A Car Insurance Company Determine My Car’s Value?
Insurance companies base their decision to write off your vehicle on the estimated repair costs versus the vehicle’s pre-accident cash value.
An insurance company’s appraiser will consider:
- the condition of the vehicle’s interior and exterior;
- its make, model, year, engine and odometer reading; and
- previous damage.
The appraiser may consult publications and websites, including classified advertisements and the Canadian Automobile Red Book.
What If I Want My Car Repaired Instead Of Written Off?
Sometimes this option is part of the settlement between the insurance company and the insured. Some companies will let you keep your totalled car.
When an insurer writes off a vehicle, Ontario’s Ministry of Transportation may brand it “salvage.” Once the vehicle is fixed and passes the required inspection, it may be branded “rebuilt” under Ontario’s Highway Traffic Act.
What If I Want My Car Repaired At A Different Shop?
If your policy covers the damage, the insurance company may want to send your car to one of its preferred shops.
You can contact a shop of your choosing to provide an estimate of repairs, including parts and labour, and send the written estimate to your insurer for consideration. The insurer may approve repairs at an alternate shop.
Is My Car Declared A Total Loss When It’s Stolen?
If a vehicle goes missing and isn’t found, it may be considered a total loss. The insurance settlement is generally based on its actual cash value.
Even if a stolen car is recovered, it can still be written off because of the damage.
What Insurance Coverage Do I Need To Be Protected Against A Total Loss?
Coverage depends on the cause of the total loss. Collision may respond to covered collision damage, while Comprehensive or All Perils may respond to covered losses such as theft.
A policy carrying only Third-Party Liability does not cover damage to the insured vehicle.
Coverage Add-Ons That Can Reduce The Costs
For an eligible new vehicle, OPCF 43 protection may be available for a set period, such as 24 to 48 months. Some insurers may offer the endorsement for up to 60 months. Confirm the exact period shown on the policy.
If you have OPCF 43 coverage, your vehicle will be settled for the lowest of the following:
- the original purchase price;
- the original suggested retail price from the manufacturer; or
- the amount it costs to replace it with a similar new vehicle.
If you owe money on a new or used vehicle, GAP (Guaranteed Asset Protection) insurance, also called Loan/Lease Gap insurance, may be worth considering. It protects you if you owe more than your vehicle’s value in the event of theft or a write-off.
GAP coverage does not change the vehicle’s insured value. It addresses an eligible shortfall between the primary insurance payment and the remaining loan or lease balance, subject to its own contract.