Accelerated Depreciation

Minor fender benders can result in damage exceeding the threshold when in fact, the damage really has no impact on the vehicle

Accelerated Depreciation is an insurance term that covers off the potential loss a claimant suffers when his/her vehicle is damaged by the fault of another motorist and is repaired by ICBC. The loss arises on the presumption that most perspective purchasers will pay less for a previously damaged vehicle than one that has escaped any accidents.

Accelerated Depreciation is best described by way of example. Let’s assume a 2018 Toyota Rav4 worth $40,000 is in an accident caused by another motorist and sustains $15,000 in damage.  If the owner chooses to sell the vehicle after it is repaired, the transfer documentation includes a declaration that it has sustained more than $2,000 in damage.  This will alert a potential purchaser to the fact that he/she is purchasing “damaged goods”, and therefore, one expects a negative impact on the vehicle’s value.

ICBC has historically been very resistant to these claims.  Their reasonable concern is that if these claims are readily acknowledged and paid, the floodgates will open.

ICBC has a good point because most accidents nowadays result in vehicle damage more than the $2,000.00 threshold.  Minor fender benders can result in damage exceeding the threshold when in fact, the damage really has no impact on the vehicle itself once repaired. This doesn’t preclude a prospective purchaser from paying less because of the “damaged goods” worry.

ICBC does not advertise the possibility of receiving compensation for Accelerated Depreciation so many motorists that are not at fault for the accidents ultimately do not pursue this claim.

Although ICBC does not publicly acknowledge they will pay out Accelerated Depreciation claims, the trend has been that they will consider paying these claims. One recent case on the topic is Rutter vs Adams where the ICBC insured received an award for Accelerated Depreciation sustained to a Toyota Matrix.

There is no question that many ICBC adjusters continue to deny the Accelerated Depreciation claims but, in some instances, some adjusters have loosened the purse strings and offered compensation rather than forcing a claimant to go to trial on that issue. The elements that are necessary to get an adjuster to pay money for Accelerated Depreciation are:

  1. Liability is not at issue (i.e. 100% of the fault was assessed on another ICBC insured driver);
  2. The claimant owns the vehicle and/or is financing the vehicle (not leasing);
  3. The vehicle does not need to be sold but if it has been sold this helps to solidify the claim; and
  4. There may or may not have been an injury but bundling the Accelerated Depreciation claim with the injury claim is helpful.

If all or some of the above requirements have been met, the claimant needs to simply inform their adjuster that they will be pursing an Accelerated Depreciation claim.  It will be up to the claimant to provide evidence supporting the Accelerated Depreciation claim. The best way of doing that is to retain an independent appraiser.

A customer can expect to pay in the neighbourhood of $200 – $800 plus costs for an appraiser’s researched opinion of the value of the Accelerated Depreciation claim.  This expense can include a physical inspection of the vehicle, market research into comparable vehicles and a review of the documentation related to the damage sustained and the corresponding repairs. The expense is usually recoverable from ICBC if you are successful.

Once ICBC has been provided the appraiser’s opinion, ICBC will usually obtain their own independent assessment of the loss.

Overall, there is no set protocol or procedure mandated by ICBC to determine the loss. Unfortunately, there are still a lot of adjusters in ICBC that will not accept an Accelerated Depreciation claim short of a court judgment. However, recent trends would suggest that ICBC is loosening the purse strings when it comes to Accelerated Depreciation.