You’ve been driving for years and have been lucky enough not to have an accident. Then suddenly, someone runs a red light in front of you and now the insurance company is telling you your car is a write-off. Having an accident is very stressful. And not knowing how the claim settlement process is handled can be a bit daunting. So, how does the insurance company determine the payout for your claim?
After the police have been called and any injuries addressed your vehicle will be towed to a garage and visited by a certified appraiser. There, the appraiser will make a determination on whether or not your car can be repaired or if it should be written off. The insurance company is obligated to pay the lower of either a) the cost to repair the loss or damage or b) the ‘actual cash value’ of the vehicle at the time it was damaged.
Actual Cash Value is determined by how much a similar year, make and model of vehicle you drove costs and takes into account your vehicle’s condition – including wear and tear, total mileage, applicable sales tax, other fees for registration and/or title.
Insurance companies use sophisticated programs that compare your vehicle’s tires, body, interior and many other variables and rates them against the average condition. Then the software adjusts the value based on the average price of the same year, make and model.
So, if your car has far more rust, dents and scratches it will lower the value. And alternatively, if your vehicle has far lower mileage it will raise the value. If you believe you’ve done work on your car that should bring the value up, tell the adjuster, they are there to work with you. Call your broker as well, we'll be able to offer some advice on what to do. For example, receipts will be required. If you still feel the value is still under what you believe it to be, do some research. Check the online vehicle sales sites, newspapers, and elsewhere. Places such as autotrader.ca are a great place for you to check the value of similar vehicles. Let us know and we'll be there to help in any way we can. Finally, talk to the adjuster and present your evidence.
Related Read: What do I do in the Event of a Claim?
The claim payout can be dependent on other coverages. One very important coverage is the Ontario Policy Change Form 43 (or some variant of it) “Waiver of Depreciation.” This coverage is meant to protect clients, who’ve purchased a brand new car, from depreciation. This endorsement is valid for between 2 to 5 years (depending on the insurance company and coverage purchased) during which if your car is written off due to a peril (example a fallen tree, or auto collision for which you have coverage) the settlement will be enough to purchase the same year, make and model, at the list price. This form, does not cover any financing or lease costs or other add-ons you may have purchased such as fabric or paint protection. And this is only available on vehicles that you purchase brand new with no prior owner. At Erb and Erb Insurance Brokers Ltd. we take special care to ensure all our clients who are purchasing a brand new vehicle are aware of the Waiver of Depreciation.
Finally, after taxes and registration fees are accounted for, your deductible is subtracted from the total. This leaves your total claim payout. If you accept this value you simply sign over the ownership portion of your vehicle registration (you retain the licence plate portion), your keys, and a signed Proof of Loss form. You cash the claim cheque and search for a new vehicle.
At Erb and Erb Insurance Brokers Ltd. we take the time to guide you through the many steps in a claim settlement. We’re here to advocate for you to make sure you are treated fairly by the insurance company.
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