My insurance company wants to write off my car. With used car prices soaring, can I make them repair it?

Finance & Insurance

Our 2007 Buick was hit by a flatbed truck while parked in a shopping plaza … The car was assessed … as needing approximately $3,800 in repairs. Based on this quote, Intact declared the car a “total loss,” ended our coverage for a replacement rental and offered a $4,500 payout – $4,000 for the value of the car and $500 for HST. In my conversation with the body shop, they confirmed that the damage was cosmetic and 100 per cent fixable … Why would they write off a car that can be repaired? Can we make them fix it? – M., Ontario

Insurance companies have a right to write off your car in Ontario – and there’s no way to make them fix it instead, insurance experts said.

“In the Ontario Automobile Policy (OAP1) used by all auto insurers in the province, the right to repair or replace rests solely with the insurance company,” said Alex Gemmiti, service team leader for Mitchell & Whale Insurance Brokers Ltd. (Mitch), an insurance broker based in Whitby, Ont. “In a strict sense, the insurer can choose to either repair or replace, regardless of the value of the vehicle or cost of repair. Normally they will pay the lesser of the two.”

So why would an insurance company decide to write off a vehicle with just cosmetic damage?

Anne Marie Thomas, director of consumer and industry relations for the Insurance Bureau of Canada (IBC), which represents the insurance industry, said… “I can tell you that if it costs more to repair it than what it’s worth, the insurance company will write it off.”

George Iny … of the Automobile Protection Association, an automotive consumer advocacy group based in Toronto, said insurance companies will typically write off a car if the cost of repairs is 70 to 80 per cent of the market value.

Easier to write off?
“Most consumers are happy with the decision [to write it off] when repairs are that extensive because they don’t have the same level of confidence in a substantially rebuilt vehicle,” Iny said.

Unfortunately for those drivers who have kept their “old, boring sedans,” such as Buicks, Chevrolet Impalas and Ford Crown Victorias, in tip-top shape, low demand for these vehicles means their value is considerably less than more popular SUVs, Iny said. So they tend to be written off with relatively little damage.

“These vehicles could give many more years of service, are hard to duplicate in equal condition, and are usually worth less than $7,000,” Iny said …

“Your insurance policy is designed to put you in the same financial position you were prior to your loss,” Thomas said.

The rules vary by province. While they’re similar in most regions, there are exceptions. In Quebec, for instance, an insurance claim allows for the “reasonable cost of repairs.”

“In exceptional cases like this one, [we’ve] argued [in Quebec] that ‘reasonable’ could even exceed the market value of a vehicle, and insurance companies have accepted it,” Iny said.

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