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How insurance works if your car is totaled

While no one can predict an incident happening that would cause significant damage to their vehicle, it can help to be prepared with the right coverage. If you've been in a collision or had an insurable loss that's resulted in your car being classified as a write-off, check out the information below to help you better understand what that means and how the insurance process works.

What is a total loss?

A total loss (or write-off) typically occurs when your vehicle has experienced significant damage, and the cost to repair it exceeds its actual cash value. Your vehicle could also be deemed a total loss in the case of an unrecovered theft, or if there's structural damage to your vehicle that can't be fixed.

How does my insurer determine if my car is a write-off?

If you have standard coverage, your insurer will decide whether your car is a total loss by calculating your car's Actual Cash Value (ACV) and comparing it against the estimated cost of repairs.

Actual Cash Value refers to the monetary value of your car prior to being damaged. To calculate the ACV of your vehicle, your insurer will consider the kilometers you have driven, and complete a market evaluation to your vehicle based on the current market selling price of your vehicle having regard to: similar year, make, model, and the condition of your car immediately prior to the accident or theft, including depreciation. Your claim adjuster will contact you to discuss the value and settlement details prior to issuing the settlement. Payment of the claim will include applicable taxes less any applicable deductible(s).

Your insurer will determine if the vehicle is repairable and compare the repair costs to the ACV, to determine whether to repair or write off the vehicle.

How long will it take to be paid out after my car has been deemed a total loss?

If your vehicle is a total loss and you're eligible for coverage, it could take up to a couple of weeks to receive your payment – depending on the processing time for your claim. Your TD Insurance advisor will walk you through the claims process and help determine how much of your claim will be covered.

In the case of a traffic collision, your insurer will also have to determine who was at fault for the accident. If you were determined not at fault, your claim payout will be covered under Direct Compensation Property Damage (province dependent). However, if you were at fault for the accident, you'll require Collision or All Perils coverage in order to be compensated.

As a TD Insurance customer, your claims advisor will keep you informed throughout the process of your claim. Plus, you can track the status of your claim in the TD Insurance Mobile App.

What type of insurance coverage do I need to ensure I’m compensated for a total loss?

Let's review some examples of potential incidents and the auto insurance coverage needed in order to be compensated:

Login to MyInsurance to review your coverage.

What happens to my insurance if my car is deemed a total loss?

If your car has been deemed total loss, your new vehicle could take the place of your old one under your policy. If you don't find a new vehicle, your old policy will be cancelled and a new policy would need to be put in place once you get a new car. Keep in mind that your driving record is one of many things that Canadian car insurance companies consider when calculating your car insurance premium.

How does a write-off work if I own/lease/finance my vehicle?

If you're the owner of a totaled car, you'll receive a payment from your insurer for the Actual Cash Value (ACV) of your car, less your deductible (if applicable).

If you were leasing and your car has been totaled, the ACV of the car will be paid to the leasing company that you leased your car from. If the amount that was paid out is less than what you owe on your lease, you'll be required to pay back the remainder, out-of-pocket.

Similarly, if you've financed your car and it's deemed a total loss, the ACV will be paid out to the financial institution or financing company/dealer that you've taken a loan from. If the amount paid out is less than what you still owe on your totaled car, you'll be required to pay off the balance. If the amount paid out is more than what you still owe on your totaled car, you'll be receiving the difference.

Does the age of my vehicle impact how a write-off is handled?

If you have an older car that's been written-off, you'll be offered a cash settlement offered by your insurer to use towards the purchase of another vehicle.

If, on the other hand, the totaled car was purchased new, your claim settlement options can differ – and for the better! With TD Insurance, if you’ve purchased our Limited Waiver of Depreciation add-on for your vehicle, you could be reimbursed the full purchase price of your car from the day you purchased it, minus your deductible.* And you'll typically be covered for up to 36 months from the original delivery date of your vehicle, so long as you continue to carry the coverage. If you haven’t added this optional coverage to your policy, you'll be offered the Actual Cash Value of your car, minus your deductible (if applicable).

Unsure if you have the right coverage to protect your vehicle in the case of a total loss? You can review and manage your policy at any time with MyInsurance. Or, if you're shopping around for a new policy to protect you and your car, start by getting a quote.

*For the purposes of this coverage, "vehicle" refers to a private passenger automobile, a motorhome or a motorcycle.

In the event of a total loss, we will pay the lowest of the following amounts:
  • The actual purchase price of the vehicle and its equipment;
  • The manufacturer's suggested listed price of the vehicle and its equipment on the original date of purchase; or
  • The cost of replacing the vehicle that is a total loss with a new vehicle with similar specifications or equipment and accessories (criterion applicable       in Ontario and Quebec only)

The content on this page is for general information purposes only and does not constitute legal advice. Coverages described herein may be subject to additional eligibility criteria, limitations and exclusions. In the event you make a claim, potential indemnification is also subject to the receivability of the claim and the type of coverage you bought.
In the case of conflict between the content on this page and your policy wordings, your policy wordings shall take precedence. Please speak to an Advisor or consult your policy wordings for further details.