When your car is damaged or totaled, your insurer will determine how to settle the claim and pay out the appropriate amount. In a repairable loss, the insurer typically pays the auto shop directly to restore the vehicle to its pre-accident condition (you must cover any deductible if you have selected any). In a total loss (write-off), the insurer calculates the car’s Actual Cash Value (ACV) – essentially the fair market value just before the loss – and offers you a cash settlement based on that amount. (Applicable taxes such as GST/HST on the vehicle’s value are included in the payout, since personal-property taxes must be added to the settlement.) In all cases you remain responsible for your policy deductible, which is subtracted from the claim payout.
Determining Settlement Amount
If repairs are feasible, insurers simply pay the repair costs (up to pre-loss condition) less your deductible. If the insurer declares a total loss, it will take possession of (or auction) the wreck as salvage and give you a single lump-sum payment. That payment equals the car’s ACV plus tax, minus any deductible. For example, if your car’s market value is $10,000 and your deductible is $1,000, the insurer would issue a $9,000 payment (assuming no gaps or other adjustments). You always have the right to question this valuation; Ontario law even allows you to demand an appraisal if you disagree with the insurer’s offer.
Who pays the claim depends on fault. In most provinces (like Ontario), if another driver is fully at fault, your own insurer pays you through Direct Compensation Property Damage (DCPD) up to your coverage limits. If you are at fault, you must have collision or all-perils coverage for damage to your own vehicle. In either case, your claim settlement will be based on the vehicle’s value in your local market and adjusted for things like depreciation and optional endorsements (e.g. new-car replacement or depreciation waivers).
