Each year there are roughly 150,000 car collisions in Canada. Among these collisions, at least one of the cars is damaged beyond repair. If you don’t have car insurance this can cost you thousands, but what happens if you do have car insurance? This is what is known as a total loss event.
What is a total loss event?
In insurance claims a total loss is when the repair cost of property is more than the insurance value. Total loss can affect housing insurance claims, however most often is associated with auto insurance. The insurer will give a “market value”, in cars this tends to be less than the initial purchase cost as cars, particularly new ones, begin depreciating the minute they leave the lot. A total loss is when the amount to repair the car or return it to the condition it was in prior to the incident is more than the actual cash value of the vehicle at the time of loss.
In some cases a vehicle may be considered a total loss is the repairs exceed a certain percentage of its value-this depends on your insurance terms and the type of insurance policy you have.
How is the vehicle value determined?
Not only will the insurer consider how much you paid for your vehicle and how long you have owned it, they will also look at the condition and structural integrity prior to the incident, as well as how many kilometres are on the clock. In this case you should make sure to keep all paperwork and recent vehicle inspection documents as proof.
In most cases the value of your vehicle and how much your insurer will pay out is negotiated upfront, however this depends on the specifics of your insurance policy.
However, even if you do find yourself the victim of a total loss event, in most cases a vehicle will still have some worth. That is because they usually contain salvageable used parts, or can be utilised for scrap metal.
What should I do if I am involved in a total loss event?
If you find yourself involved in a serious collision that you think may be a total loss event, you should firstly make sure you are safe. If you can move safely, move your vehicle from the road and away from oncoming traffic. In any instance you must immediately report the incident to the police. Turn on your hazard lights if your vehicle is still in the way of or close to other traffic.
For insurance and evidence be sure to record the date, time and location of the accident; the make, model and license plates of all vehicles involved in the accident; and the name, contact details and insurance information of all drivers involved, as well as any details from on-scene witnesses.