The difference between car accident and theft write-offs

If your car is totalled in an accident or stolen and never recovered, you may be facing a write-off. A write-off (also called a “total loss” in the insurance industry) is when the cost of repairing or salvaging your vehicle is more than the vehicle’s current market value. But when it comes to collisions vs. theft, there are a few differences in how auto insurance companies handle and pay out write-offs.

Write offs: accidents vs. theft

When it comes to accidents, a total loss means your vehicle is beyond repair, or the cost of repairing your vehicle is more than what your vehicle is worth. If your car is stolen and not recovered, it’s also considered a total loss. Ultimately, it’s up to the auto insurance company to make that call.

First, it’s important to know if your insurance policy covers the replacement cost or the actual cash value of your vehicle. Most car insurance policies will reimburse you based on actual cash value, which is how much it would cost to replace your car, minus depreciation from age and use. 

Replacement cost doesn’t take depreciation into account, and will cover the full value of replacing your car. Replacement cost coverage isn’t standard with basic car insurance policies, and needs to be added on as an endorsement called a waiver of depreciation.  

Morgan Roberts, director of RH Insurance, recommends adding a waiver of depreciation if you’re buying a brand-new car. It adds a small cost to your insurance premiums, but the insurer will pay out the vehicle’s full value if you need to replace it. 

“That means if you bought the car brand new last year for $80,000 and it gets stolen, you’re getting back what you paid,” said Roberts. 

As for whether or not you pay a deductible on your total loss claim, it depends on the situation. For example, Ontario car insurance is based on a no-fault insurance system and wether or not you are deemed at-fault will have major implications for how a claim is handled.

“If your car is stolen, you pay a deductible. If you’re considered at-fault for an accident, you will pay a deductible. If you’re not at fault for an accident, you won’t pay a deductible,” said Roberts. 

If your car is stolen, your claim will fall under comprehensive insurance, an optional add-on to your policy that covers vandalism, fire and theft. If your insurance company decides you’re at fault for the collision, your claim will fall under collision insurance coverage, which is mandatory in some provinces and optional in others (it’s also usually required if you lease or finance your car). If you’re deemed not at fault for the accident, it falls under direct compensation property damage. 

How to negotiate with car insurance adjusters about total car loss Canada

If your insurer decides your damaged or stolen car is a total loss, a claims adjuster will do an appraisal and offer you a settlement based on what they think your vehicle is worth – but you don’t necessarily have to take the first offer. 

Roberts says that if you don’t think the amount is fair, you can do some research and present a counter-offer by finding cars for sale in your area that match your vehicle’s exact year, make, model and mileage. 

“For example, if you’ve seen the same car for sale everywhere for $50,000 and they’re offering you $30,000, if you show them proof that it’s for sale in your area at that price, you can always negotiate. It’s not guaranteed, but you can always bring that back to the table,” says Roberts. 

Roberts also notes you should always inform your insurance company if you make any modifications to your vehicle, such as lift kits or custom tires and rims, to make sure the changes are allowed under your policy and you’ll be covered if you make a claim. 

How long does it take an insurance company to pay out a claim in Canada?

How long the insurance claim process takes depends on how complex the claim is – things like litigation, an insurer processing a higher than usual number of claims after a natural disaster, or negotiating back and forth about your settlement offer could draw out the process. But once everything is settled, it takes about four to six weeks for you to receive your payout.

How much does insurance go up after an accident in Canada?

First, it’s important to know what to do after a car accident, from exchanging information with the other driver to taking photos and recording the details of the incident. If you want to make a claim, you’ll need to submit it to your insurance company as soon as possible – preferably within 24 hours, but most insurers will give you up to seven days. 

If you’re deemed at fault for the collision, your rates will go up when it’s time to renew your policy. However, if you have accident forgiveness insurance, your insurance rates will not increase after your first at-fault accident. If the insurance company decides you’re not at fault, your rates may not go up, but you may lose any discounts associated with your formerly claims-free status (if your insurer offers it).

What to do if your car is stolen in Canada

Unfortunately, vehicle theft is on the rise in Canada. Here’s an unsettling statistic: a car is stolen every six minutes across the country, according to a 2023 report by the Canadian Finance and Leasing Association, citing the Insurance Bureau of Canada. 

Whether you own one of the top 10 most stolen vehicles in Canada or are just unlucky enough to go through the experience, you’ll need to call the police to report your vehicle as stolen and contact your insurer to start the claims process. 

However, there’s also a chance that your stolen car could be found. It depends on your insurance policy, but typically if the claim is closed and you’ve already been paid a settlement, the found car will belong to the insurance company (but don’t worry, you’ll still get back any personal items that were inside the stolen car). If the claim is still open, the insurance company will assess if the vehicle is damaged and whether it can be repaired and returned to you or if it should be written off as a total loss.   

The bottom line

Having your car stolen or damaged beyond repair is a stressful situation, but having the right type of insurance coverage can make the claims process easier. When comparing auto insurance quotes, consider adding comprehensive insurance and/or collision insurance to your policy so you’re covered in the event of a write-off. 

Also read:

• The top 10 most stolen vehicles in Canada
• What happens if your stolen car is actually found?
• How stolen vehicle trends can impact your auto insurance