Sadly, vehicle collisions are all too common in Canada, especially around metropolitan areas. If you’re lucky enough to walk away from a car crash with your health intact, the next thing you’ll have to think about is how you’ll be covering the damage that’s been done to your vehicle.
While many Canadians go with their car insurance provider, the available coverage can vary greatly depending on the circumstances of the collision and the amount of damage your car has sustained. For instance, what can you do when your car is totaled?
How Does An Insurer Decide If Your Car Is Totalled?
Every car insurance provider has different policies. However, most insurers will consider your vehicle ‘totalled’ once it’s damaged beyond fixing or when any repairs would cost more than its actual cash value. So, if the repairs exceed 50% – 80% (varies by provider) of what your car was worth prior to the collision, your insurer may write it off as a total loss.]
Other factors that car insurers commonly use to determine your eligibility for coverage:
- The age and condition of the vehicle (before and after the crash)
- What safety issues the car presents and whether they’re repairable
- The estimated cost and repair time of all damage
- The costs of salvaging the vehicle
What Happens If Your Car Is Totalled?
The evaluation of the potential car insurance claim (done by a claims adjuster) will also be based on a number of situational factors, like the location and circumstances of the collision. If your car meets at least one of these conditions, it will usually be considered totalled:
- Its airbags have been deployed
- Its structure is damaged beyond repair (reasonable safety)
- Any repairs would cost more than its cash value
Essentially, if the insurer doesn’t think it’s worthwhile to cover the repairs, they’ll label your car as a total write-off. From then on, you may qualify for one of two payout types:
Not At-Fault Accident And Totalled Loss Payout
If you’re not responsible for the crash, the insurer will provide direct compensation for property damage (DCPD), in the form of a settlement that’s equal to your vehicle’s current cash value.
At-Fault Accident And Totalled Loss Payout
If you’re at-fault, the insurer will only pay the cost of replacement if your policy has comprehensive insurance. In this case, the payout varies according to the car’s cash value, minus your deductible.
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How Is A Car’s Value Calculated?
Value estimates can be conducted by a mechanic or qualified witness and may include factors, like your car’s:
- Make, model and year
- Condition before and after the crash
- Interior or exterior upgrades/modifications
For example, if your car is over 10 years old and already has a lot of mileage and wear n’ tear, the repairs might cost way more than what it’s worth on the market. Even minor damage can lead to a total loss when it diminishes the vehicle’s safety or drivability.
How To File A Claim With Your Insurance If You Totalled Your Car?
Here are the general steps to claim a car crash on your insurance:
Step 1. Get The Driver’s Insurance Details
Start by swapping your insurance and registration information with any other drivers involved in the car accident. Don’t forget to take pictures of all the damage and take down their license plate numbers too.
Step 2. Report The Accident
If possible, report the incident to your insurer on the spot. This can be stressful but necessary and may require details like:
- The contact information of any witnesses to the incident
- Registration, license and insurance information from both drivers
- Plate numbers and issuing province from both vehicles
- A full summary of the crash (time, date, place, weather conditions, etc.)
In some cases, you can also call the police and report the accident, though you’ll still have to call your insurer to start a claim.
Step 3. Tow Your Car (If the Car Is Undrivable)
Getting a tow can be pricey. Some policies, new car promotions and insurers (like CAA) will cover this cost but that’s not a guarantee, so make sure to have your license and payment method handy.
Step 4. Collect All Your Documents
Next, go home and gather any significant documents related to the vehicle, including but not limited to:
- Proof of Ownership
- Bill of Sale
- Repair/Maintenance Receipts
- Financing/Leasing Documents
- Safety Certification
Step 5. Call To File Your Claim
Contact your insurer to report the collision and learn your options. When you start a claim, your insurer should assign you a claims adjuster, who will investigate your case to verify the validity of your claim. They will look at factors such as:
- How and when the collision took place
- Who is at-fault (responsible for the incident)
- What type of coverage you have
- Whether your claim falls under the conditions of your policy
Step 6. Accept Or Fight The Offer
The insurer will also assign an appraiser to assess the damage done to your car and determine its cash value. If it’s deemed a total loss, don’t make any rash decisions, because you have several options, such as:
- Accepting the settlement/payout offered
- Finding the car’s true market value and negotiating a better payout
- Selling it to a scrap yard for parts (if it’s irreparable)
- Keeping the car with the settlement and paying for repairs out-of-pocket (if it’s considered salvageable and passes a full safety inspection afterward)
How To Negotiate A Car’s Value With Your Insurer
If you think your insurance provider’s first settlement offer is too low, there may be a few things you can do to negotiate a larger payout after your car is totalled, including:
- Research – Don’t accept an offer until you get the car’s true value. Go online, see a reliable mechanic and collect any documents to support your claim. The more evidence you show the adjuster, the more negotiating power you’ll have.
- Get A Lawyer – If you need help or think your insurer’s offer is unfair, hiring an attorney may save you stress and may help earn you a larger payout. However, it can be pricey, especially if you go to court. With that in mind, getting a lawyer should perhaps be your last resort if you don’t want to spend extra money.
- Ask For A Written Settlement – Once you negotiate a fair settlement, remember to get all its conditions in writing. This will hold your insurer to their agreed payout amount and protect both parties if the terms of the settlement are ever violated.
How Much Will You Get If Your Car Is Totalled?
If your car is totalled and your insurer says you’re eligible for coverage, the size of your settlement payout could vary according to a number of factors, like:
- Your Policy – If you have a comprehensive car insurance policy, you may be able to add “new car replacement” to your policy. Doing so covers the purchase price of a car of equal value. While this can raise your premium, it provides wider coverage than regular collision insurance; which doesn’t offer any payout.
- Actual Cash Value (ACV) Coverage – This less expensive add-on compensates you for the ‘current’ value of your car (pre-collision). The value is determined by subtracting the car’s depreciation amount from its former purchase price. A car’s ACV is assessed using factors like mileage, age and pre-existing damage.
- The Appraiser’s Assessment – Insurers also adjust your payout according to their appraiser’s evaluation of the damage, combined with their own research into comparable vehicles and the investigation of your claim. If you can reach a fair settlement, the insurer will normally issue you a check, minus your deductible.
- Financing – If you owe money on your car from a loan or lease, the insurer pays your lender(s) first. Any positive balances will then be sent to you by check (if the car is worth more than you owe). Unfortunately, if you don’t have gap insurance, you have to pay any negative balances which means you will owe more than the car’s value.
Frequently Asked Questions
How fast will I get my payout?
Will my insurance increase after a total loss?
Can I keep my car if it’s been totalled?
What if I’m not happy with my totalled car’s appraised value?
What happens to my car if it’s totalled?
Got A Totalled Car On Your Hands?
In that case, you better speak to your insurer and get expert advice. Totalling a car is a scary and dangerous event, which might leave you with a large bill afterwards. Luckily, there are plenty of ways you can resolve the situation financially. Contact a professional, do lots of research and compare rates before you try to claim a totalled car on your insurance.