How do you determine the value of a vehicle that has been stolen or declared a total loss?

Your insurance policy is the key

If your vehicle has been stolen or declared a total loss, your insurer considers various factors to determine the value of your vehicle at the time of your claim settlement. Of course, much depends on the insurance coverage you had when the loss occurred. What choices did you make when you purchased your insurance policy? Did you choose to be insured for the value of the vehicle at the time of the loss as per your basic automobile policy (OAP 1), or did you opt to be insured for the value of the vehicle with no deduction for depreciation by adding the Limited Waiver of Depreciation coverage (OPCF No. 43 or 43 A) to your policy? The answer to that question will have an impact on the amount of your settlement.

Actual cash value at the time of loss or damage

  • Corresponds to the depreciated value of your vehicle, that is, its market value just prior to the loss.
  • This amount is determined by calculating the average value of comparable vehicles on the market, then adjusting it to take into account the condition of the stolen or damaged vehicle (mileage, rust, additional equipment, etc.).

Limited Waiver of Depreciation

  • Determined by your insurer, this amount corresponds to the least costly of the three following options:
    • The manufacturer's suggested retail price
    • The actual purchase price of the vehicle and its equipment
    • The actual cost of replacing the vehicle with a new one of the same make and model similarly equipped

A few telling examples

Here are a few examples that illustrate how we arrive at a claim settlement when a vehicle is stolen or declared a total loss when you have the Limited Waiver of Depreciation coverage.

  • You have purchased a new vehicle in 2011 for a total of $19,500. This vehicle was completely redesigned in 2012, so when you submit your claim in 2013, a comparable vehicle now costs $24,300. The maximum that your policy will pay is $19,500.
  • You have a 2012 mini-van that you purchased new for $29,000. When you submit your claim in 2013, the manufacturer is also offering an $8,000 factory rebate that was not available in 2012. Due to this rebate, your vehicle can be replaced with a new one of the same make and model valued at $21,000, therefore this is the maximum your policy will pay.
  • In 2012 you ordered a brand new 2013 model of a vehicle with a manufacturer's suggested retail price of $34,800. Due to the short supply and high demand for this model, you paid the dealer $36,000 to ensure you would get your car. The maximum your policy will pay is the manufacturer's suggested retail price of $34,800.

It's all a question of value

In general, whether you own or lease a brand new car, opting for the Limited Waiver of Depreciation coverage can prove to be a wise choice since it shields you from the negative consequences of the depreciation of the value of your vehicle.

So will you opt for the Limited Waiver of Depreciation or actual cash value coverage in the event of loss or damage? It all comes down to what you're looking for. Just as you would with any other decision, let yourself be guided by what best suits your needs!

*Certain conditions, restrictions and exclusions apply to all offers. The information contained in this newsletter is for informational purposes only. belairdirect makes no representation, warranty or guarantee that use of this information will prevent damage or reduce your premium. Your insurance contract prevails at all times, please consult it for a complete description of coverage and exclusions. ®belairdirect., ®The Crash Proof Policy, and ®Little Knight Design are registered trademarks of Belair Insurance Company Inc. ©2012 Belair Insurance Company Inc. All rights reserved.

Learn more about replacement cost insurance coverage and how it can protect your car if it gets stolen or totaled.