Total Loss Policy Questions & Answers

July 20, 2015

ICBC recently released an update to its Total Loss Policy Questions and Answers. Within the document it appears to shut the door on previous discussions around maintaining repairability other than industry being given the opportunity to do more for less.

I approached ICBC to speak to them about modifications to satisfy the customer in these circumstances while not placing industry in the position of absorbing all the potential risk or loss. ICBC for their part is trying to ensure that vehicles are properly designated. The main policy involved is Motor Vehicle Act and CCMTA (Canadian Council of Motor Transport Administrators) guidelines attached.

Motor Vehicle Act, section 17.1 states:
· ICBC is required to give notice of a change in vehicle status – to salvage or irrepairable – when a vehicle has been “written off”.
· A motor vehicle is “written off” if ICBC decides to pay the insured for the motor vehicle rather than pay for its repair.

CCMTA Guidelines state: A motor vehicle must be designated salvage if:
· An insurer decides it is no longer economical to repair the vehicle for legal operation on the highway.
· The cost of repairing the vehicle for legal operation on the highway exceeds its fair market value immediately prior to damage.
· The contractual thresholds for repair are exceeded.

ICBC deems its repair threshold differently than CCMTA guidelines. ICBC uses the “net ACV” while CCMTA refers to the fair market value not being exceeded.

It’s understandable that insurance companies need to have a set policy to outline how claims are handled and to set customer expectations around this … ICBC has in the past confirmed verbally that there is room to manoeuver in these cases…I’m not sure if this will continue.

Question 13 of ICBC’s Q&A’s seems to recognize some of that flexibility as it identifies that ICBC may or may not deem the vehicle a total loss, however, that is as far as ICBC will go. I spoke to ICBC to see if we could develop a policy for those rare cases where the customer wants to retain their vehicle and the repairs are below the ACV. I proposed that either the customer is given the chance to contribute or ICBC allows the repair up to the ACV without industry having to be the one who needs to discount their repair profit. There are not a great number of vehicles that fall within this category as most customers, given the chance to total loss, will take that option. In the discussion ICBC stated that they are satisfied with their position and not willing to take on any additional risk. They reiterated that the options are voluntary for industry to adopt, either discount repairs, TL the car or the customer deals with the “owner retention” process. I’ve attached a link to the Q&A’s for your review, please review to see the options available to you should you choose to discount your repairs.

ICBC’s TL Policy Q&A’s