When it comes to situations involving an ICBC write off or ICBC salvage, often in the time immediately following a vehicle accident the most immediate concern of a driver is “What is ICBC going to do with my vehicle?” or “I need a vehicle!” While it’s not usually worth the money to hire me to deal with this I will tell you here, absolutely FREE, what you need to know to resolve the issue of physical damage to your car.
To rephrase the above question, “Will my car be repaired properly or will I get enough money to replace my car if they write it off? And why does the insurance company get to decide what happens to MY car?
Depending on how the accident happened and what insurance you purchased, there are a couple of different ways ICBC can approach your vehicle claim but either way, they are obligated to restore you, as nearly as possible, to your pre-accident position.
If the vehicle is ‘repairable’ then you get to pick the body shop you want doing the work. Provided that the shop charges the going rate and no more ICBC will pay the full cost, subject to any deductible that may apply. If a deductible is involved, if you’re not at fault (and provided the other vehicle is insured by ICBC) the deductible will either be reimbursed or waived.
When the repairs are done the body shop needs your signature on the ICBC form, (known a the CL14) to get paid. When you sign it you are agreeing that the repairs appear to have been done satisfactorily.
Just because the initial repairs are completed and the car picked up doesn’t mean you’re on your own, particularly if an issue arises within a reasonable time frame and can be linked directly to either workmanship or the impact to the car. The body shop must deal with the former and ICBC the latter. Notify the appropriate party promptly. Anytime you want to speak with someone at ICBC about vehicle damages, call ICBC with the claim number and ask to speak to the ‘Estimator’ on your claim.
Now, what if the repairs are extensive and there is some question about repair vs write off? Since ICBC is paying the bill, they get to decide which way to go. Sometimes you can influence that decision but more about that after some basics.
First, writing off a car is an economic decision not a physical one. To put it in perspective, if you went out and bought all the parts to a new car, say a Yaris, and had a body shop put it together into a working vehicle, your cost would be upwards of half a million dollars, as opposed to buying one of the assembly line through a dealer for $20,000. So it’s not difficult to see that repairing part of a car can quickly add up to the value of the vehicle, even when the damage doesn’t look that bad.
Secondly, it’s a fact of law that the insurance company is obligated to restore you to your pre-accident position, no better and no worse.
So no worse means that if they are going to write off your car they have to give you enough money to go out and replace the car in today’s market with a similar make model and year vehicle in the same shape. That’s called the ‘actual cash value”.
You can check that out by looking at the for sale ads and then adjusting for your particular vehicle’s condition and a bit of inflation in the asking price for negotiations. ICBC also needs to add in for taxes that you will have to pay. Remember that what you may invest in a car isn’t the same as what you get out of it. So a new engine is going to put your claim near to the top end of the market but probably won’t get you the full investment back out that the new engine cost.
No better means that you won’t be able to take the full value for the car and keep what’s left. The ‘salvage’ has value. Lots of businesses make money selling parts off wrecks or even fixing them themselves at lower than retail rates and reselling them. If the insurance company writes off your wreck, they get to sell the salvage and keep the proceeds.
Back to the math. Let’s say the actual cash value is $10,000 and the insurance company figures they can get $4,000 for the salvage. That means that if they decide on the write off option it will cost them a net of $6,000, $10,000 to you and $4,000 back to them on sale of the salvage.
If the cost of repairs is $5,000 then it makes sense to fix the car, all other things being equal. If it costs $7,000 to fix the car then it’s better for them economically to write it off, even though the cost of repairs is well below the actual cash value of the vehicle.
‘All other things being equal’ means other considerations such as customer relations, the cost of administering the claim and other expenses such as the cost of putting you in a rental car while repairs are being completed in the event that you are entitled to one, either through your own policy or because someone else is liable. If they have to pay for a rental as well as repairs then the cost of the rental gets added to the cost of repair when they make the decision to repair or write off. In the preceding example, an $1,100 car rental makes the total cost $6,100 which tips it over into the write off category.
Also as the damaged parts are stripped away, previously unseen damage may be revealed. Sometimes to avoid that possibility, they will write the car off even when the initial estimate makes it repairable. When the repairs are extensive it’s sometimes a good customer service, as well as administrative, decision for ICBC to write it off.
ICBC generally will not just pay you cash and let you take responsibility for the repairs. They don’t want poorly repaired vehicles out there causing further claims. There are exceptions but that’s the general rule.
The last issue is something called ‘accelerated depreciation’. Consumer protection law in BC requires that a seller of a vehicle is required to declare to prospective purchasers previously repaired damage over a certain dollar amount. It stands to reason that if there are two similar cars for sale and one has been in an accident and the other hasn’t a buyer will opt for the undamaged car and will only choose the other if he gets a deal.
Current law says that if your car is repaired at a cost of over $2,000 then you have to declare it when you sell it, which can mean that it’s worth less as an asset even if the repairs have been done properly. ICBC doesn’t want to end up paying an extra amount on every vehicle they repair so its their normal practice to resist claims for accelerated depreciation. They generally only pay if you get a judgment against them for that specific issue.
The good news is that you can have this resolved in small claims court which is geared for resolving disputes without the need for a lawyer. The bad news is that it’s not easy to get a court to agree with what appears to be a fairly obvious position to you as the car owner on the street and small claims isn’t actually a very friendly place for a non-lawyer.
To ensure the best chance of success in this sort of action you need to
- Do your best to ensure repairs have been done properly
- Make a genuine effort when selling the car afterwards (yes you have to actually incur the loss by selling it for less than normal despite your best efforts)
- Get an ‘expert’, maybe a used car sales manager that you can hire for the purpose, to provide an opinion that you got less than market value and that the only reason this happened was because the car was repaired, even though repaired well.
Even with all this, it’s important to remember that, like any court action, it’s another human being other than yourself, in this case the judge, that has control of the outcome and you can never safely predict what the ‘human being other than yourself’ will actually do.
To avoid both the adverse effects of accelerated depreciation and the risk and expense of a small claims action, your alternative is to first ensure the repairs are done well and then to keep the vehicle as long as possible so that the repairs have a chance to prove themselves over time.
Also the longer you wait to sell the car after repairs are done, the more likely that some of the competing cars on the market are also going to have previous repairs. There are hundreds of thousands of accidents each year. The older the car, the more likely others like it will have been hit, and the more opportunity to show a prospective buyer that the repairs are sound.
If you’ve got money to burn and a burning desire to prove a point, by all means have at ‘er as they say but my advice is to be prudent on this issue and save your energy and time for the negotiation of more important matters like your injury claim.
P J Butler of Butler & Company Law Firm.
If you need help in collecting a fair settlement with ICBC for your damaged vehicle or you need representation for your personal injury matter then please consider calling lawyer Jamie Butler at 604-318-3838. You will be glad you called!
