When your vehicle is written off, you are paid for the fair market value of your vehicle
If you are at fault for the accident but purchased collision coverage, your vehicle may be written off by ICBC if it costs too much to repair it. The same applies if you are not responsible for the accident, regardless of whether you have collision coverage.
When your vehicle is written off, you are paid for the fair market value of your vehicle and ICBC gets to receive any money from selling your vehicle for salvage. You are not paid the amount it costs for you to find and buy a similar vehicle as the insurance is not “replacement cost insurance”. Also, the size of your car loan is irrelevant, and, in some cases, the write-off amount is less than the balance owing on the car loan.
During the write-off process, ICBC asks you to sign a Salvage Release form, which transfers your vehicle from your name into ICBC’s name. This allows ICBC to sell the vehicle through a salvage auction. The salvage auction process supplies most recycled parts used by the automobile repair industry in B.C. ICBC “pockets” any money they receive from the salvage auction.
ICBC will pay by cheque, the amount that they say is the value less any “collision deductible”, to the registered vehicle owner and any lien-holder (i.e. anyone with a financial interest in the vehicle, such as a bank, lease company or repair shop). If you are not at-fault for the accident, ICBC will release the deductible once they have determined the other party to be at-fault for the accident.
ICBC also pays the applicable taxes in total loss settlements. If you are owed PST/GST on your settlement, you will be given a tax voucher. You can use this voucher to reduce the taxes payable on a replacement vehicle when purchased or leased through a licensed motor dealer.
In terms of the fair market value of your vehicle, ICBC generally uses a computer program called Autosource. The computer program can underestimate the actual value of the vehicle. Hence, it is wise to check out print media or web sites and determine what similar vehicles are selling for in your region.
The best way of counteracting ICBC’s valuation is to have your own evidence from print media or web sites to show the price at which similar vehicles are being sold. Also, if you can show that your vehicle is better than the average comparable vehicle by way of such things as add-ons, low kilometers, extra equipment purchases, etc. you will be better able to convince ICBC that your vehicle is worth more than they say. In addition, you should consider hiring an independent appraiser to determine the fair market value of the vehicle.
If you bought ICBC’s Replacement Cost and Limited Depreciation coverage on a new vehicle, the amount you receive for your write-off is equivalent to the cost of a replacement vehicle not the actual fair market value of your vehicle. This insurance sounds great but in a serious collision, ICBC may end up extensively repairing the vehicle to save money especially if the replacement cost is high.
In some situations, if you have a specialized vehicle such as motorcycle, collector vehicle or trailer, you must declare the value of the vehicle when you pay insurance and that value has a large bearing on what ICBC pays if your vehicle is written off.