We will never stop discovering amazing features in auto and home insurance contracts. Here is a seemingly harmless one… until a stupid accident crumpled the door of an 11-year-old vehicle.
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Not being a regular in collisions or an auto insurance expert, my colleague Josée recently discovered with indignation that a little sheet metal damaged by others could cause her to lose her car. Because no, breakages are not systematically repaired. The value of the vehicle at the time of the accident enters the equation.
“Desjardins tells us that not only are the manager’s insurance not going to pay, but that the repair costs are too high compared to the value of the car, which is $ 4,500,” summarizes Josée. As a result, her Kia Rondo was declared a total loss… a few days after she had made a return trip from Montreal to Sherbrooke already planned in the family agenda that there was no question of canceling.
Josée deplores this decision for both financial and ecological reasons, since obviously, the condition of the door does not prevent the vehicle from rolling.
PHOTO PROVIDED BY JOSÉE LAPOINTE
Josée’s Kia Rondo was declared a total loss due to the damaged sheet metal.
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“They give me $ 3,800 and take the car back. They don’t even want us to pay the balance to do the repairs! They literally force me to get rid of my car, when the damage is mainly cosmetic and we have spent a lot of money on its maintenance for 10 years, thousands of dollars, which they do not care a bit ”, s ‘insists the Montrealer.
The CAA and the Insurance Bureau of Canada (IBC) confirmed to him that Desjardins was within its rights, since that is how insurance policies are written.
With three children to transport, the family couldn’t wait for moons to replace their vehicle. The small crash therefore resulted in an unforeseen and urgent shopping spree at a very bad time. Because, the height of bad luck, the shortage has caused the price of used models to jump in recent months.
Needless to say, the new purchase cost a lot more than $ 3,800. And that a loan over a few years, unforeseen in the family budget, was necessary.
This scenario is well known to the boss of the Automobile Protection Association (APA), George Iny. It is especially the elderly who have been driving for a decade in midsize sedans who are paying the price, he has long observed. Their cars have not been driven very much, they have been well maintained, and have often been stored in winter (in the case of snowbirds), but are theoretically only worth between $ 3,000 and $ 6,000. At the slightest collision, the insurer will want to declare them a total loss.
As the market value is determined by the insurer, it is always possible to challenge it in small claims if it is deemed too low. But it is still necessary to have the energy to embark on such a procedure.
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The main principle of auto insurance is that they cover the value of the car, summarizes the BAC. Thus, a $ 5,000 repair will be reimbursed on a vehicle worth $ 15,000, but not necessarily on one that sells for $ 4,500. Even if it is exactly the same sum which comes out of the pockets of the insurer. “It is not the amount of damage that matters, but the comparison between this amount and the market value of the vehicle,” explains BAC spokesperson Pauline Triplet.
She explains that this industry standard is primarily justified by road safety. “As soon as the damage touches the structure of the vehicle or the technology, safety will always prevail. The insurer must ensure that a vehicle that is safe for its insured and for other drivers is put back on the road. ”
Since the total loss cases “are all unique”, Mr.me Triplet suggests that drivers speak with their insurer to find common ground and notes that cases of “purely cosmetic damage will likely be more subject to negotiation.”
Did Josée have the misfortune to come across a zealous employee? We’ll never know. But nothing prevents an insured from paying part of the repairs if he wants to keep his vehicle, swears the BAC. You can also choose the mechanic yourself if you think you will get a lower quote.
There is another way to keep your car, says Mr. Iny, of the APA: insist (very strongly) to ensure that paragraph 2.2 of the FPQ N ° 1 policy is respected. This stipulates that the insurer must return the accident vehicle in its original condition if the costs are “reasonable”. It is very subjective, therefore not won in advance, but this criterion should take into account the very low probability of finding an equivalent in the market, judges Mr. Iny.
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As for the ecological aspect of the case, the BAC specifies that the vehicles declared total loss are sold by a network of auctioneers and bought back by traders holding a license. Some repairable cars will thus be entitled to a second life. Others will be sold as spare parts.
By assigning the “total loss” label to an older vehicle, the insurer therefore ends up with a lower bill than that of the garage owner, in addition to benefiting from the proceeds of the sale. In short, from a financial point of view, it is advantageous across the board.
Keep your eyes open, Josée, you could come across your 2010 Kia Rondo for a final farewell!
Consult the FPQ N policyO 1 (paragraph 2.2 on page 47)
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