How insurance works if your car is totaled

No one can predict an incident happening that would cause significant damage to your vehicle, but it can help to be prepared with the right coverage. If you've gotten into a collision or had something happen to your car where it’s deemed a write-off, check out the information below to help you better understand what it means and how the insurance process works.

What is a total loss?

A total loss can occur as a result of a collision, weather-related damage, vandalism, etc., or in the case of an unrecovered theft. Although insurers will have different guidelines, a total loss is typically when your car has experienced significant damage and the cost of repairs exceeds a certain threshold relative to the value of your car. Or, if your car is considered unrepairable. In these instances, your car would be deemed what is more commonly referred to as totaled, or a write-off.

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

This will depend on what happened to your car that resulted in the total loss. Here are some examples of some incidents with the auto coverage needed in order to be compensated:

  • At-fault traffic accidents (with/without other parties) would require Collision or All Perils coverage.
  • Vandalism would require Comprehensive or All Perils coverage.
  • Unrecovered theft would require Specified Perils, Comprehensive or All Perils coverage.
  • Weather-related damage (e.g., hail damage) would require Specified Perils, Comprehensive, or All Perils coverage.

How does the insurance process work with a total loss?

Whether you’ve been in an accident or incident that resulted in significant damage to your vehicle, you'll need to report it to your insurance company and submit a claim. Your insurer will likely require you to provide them with the following:1

Your information

  • Your policy number
  • Your vehicle details such as make, model, year, license plate number and registration
  • Your license
  • The date, time and location of the accident
  • Any injuries
  • Number of people involved
  • Extent of damage to the vehicle
  • Your description of the accident

The other party's information (whenever possible)

  • The name of their insurer and their policy number
  • Their name and driver's license number
  • Their license plate number
  • The year, make and model of their vehicle

After submitting a claim, your case will be assigned a claims adjuster. Your adjuster will walk you through the claims process and help determine how much of your claim will be covered. Depending on the extent of the damages and the value of your car, your claims adjuster will determine whether your car is repairable or a write-off.

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

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

Your insurer will come to that decision by first calculating your car's Actual Cash Value (ACV) which is the monetary value of your car prior to being damaged. They'll look at the make, model and year of your car and factor in the kilometers you've driven, the condition of your car prior to the accident and its current market value. If the estimated cost of repairs exceeds your insurer's threshold relative to the car's ACV, or if the car itself is unrepairable, your insurer will deem your car a write-off and proceed with settling your claim accordingly.

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 ACV of your car, less your deductible (if applicable).

If you were leasing and your car has been totaled, the Actual Cash Value of the car will be paid to the financial institution 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 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.

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

If you have an older car that's been written-off, your only option would be to take the cash settlement offered by your insurer and use it 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'll be reimbursed the full purchase price of your car from the day you purchased it.* 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.

* This coverage is available June 10, 2021.
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)

Mailing address:
TD Insurance (Corporate Secretariat)
50, Place Crémazie
12th Floor
Montreal (Quebec) H2P 1B6

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.