Car total loss payout in Canada: how the amount is set and what to do if it is too low

An adjuster inspects the car and decides whether it can be repaired or is a total loss, also called a write-off. The adjuster compares the car's value just before the collision with the repair cost plus the salvage value (what the wreck could be sold for). If the repair cost plus the salvage value is more than the pre-collision value, it is a total loss.

MyChoice says Ontario has no fixed write-off threshold. Each insurer sets its own, based on repair cost, the pre-accident cash value and the expected salvage value.

Sources: Insurance Hotline: My vehicle is a write-off. Now what? (no date shown, last confirmed November 10, 2026); MyChoice: Car write-offs, how it works (Ontario focused, updated September 24, 2026, read November 10, 2026).

Your car was worth $12,000 the day before the crash. Repairs would cost $9,000. The wreck could be sold for $3,500. Repairs plus salvage is $12,500, which is more than $12,000, so the car is a total loss. If you have a $500 deductible and the crash is covered under collision, the cheque would be about $11,500 on those numbers. That is our own arithmetic for illustration. Your policy and the insurer's valuation set the real figures.

The settlement is based on the car's cash value before the accident, which allows for depreciation. Factors named by the sources: make, model and year, odometer reading, features and engine, condition, aftermarket upgrades, previous damage, and prices of similar vehicles. An appraiser may use sources such as the Canadian Automobile Red Book.

If you were at fault, collision coverage pays based on current market value, minus your deductible. If you were not at fault, direct compensation property damage coverage pays based on current market value. You buy the replacement car yourself.

Some newer vehicles with an endorsement called OPCF 43 in Ontario settle at the lowest of the original purchase price, the manufacturer's suggested retail price or the cost of a similar new vehicle. Check whether your policy has it.

Neither source says whether sales tax is part of the payout. Ask your insurer in writing.

Sources: Insurance Hotline: My vehicle is a write-off. Now what? (no date shown, last confirmed November 10, 2026); MyChoice: Car write-offs, how it works (Ontario focused, updated September 24, 2026, read November 10, 2026).

The payout is based on the car's value, not on your loan balance. If the car was worth less than you owe, there is a gap. MyChoice says GAP insurance, also called loan or lease gap insurance, may cover the eligible difference between the insurance payment and what you still owe, under its own contract. Our other source does not address loans.

Keep making your loan payments until the lender says otherwise. Ask your lender and your insurer who is paid first. We did not find a source for that, so we do not say.

Source: MyChoice: Car write-offs, how it works (Ontario focused, updated September 24, 2026, read November 10, 2026).

• Ask the insurer how it reached its figure. The calculation may have an error.
• Research your car's market value. Find sales of similar cars with the same year, model, kilometres and features.
• Ask your insurance advisor or broker for help.
• Hire an independent appraiser if the gap is large. The Insurance Hotline says this can cost from $400.
• Send your claims representative a counteroffer with your evidence.
• If you still disagree, the options named are arbitration, the insurer's ombuds office, the General Insurance OmbudService (free, but only for member companies), or small claims court or a lawsuit, which can be costly.

Source: Insurance Hotline: My vehicle is a write-off. Now what? (no date shown, last confirmed November 10, 2026). Neither source gives a deadline, so act early and check your policy for time limits.

MyChoice says some insurers let you keep a totalled car as part of the settlement. A written-off car may be branded irreparable (parts only) or salvage (must be repaired and inspected). In Ontario the Ministry of Transportation assigns the brands, and a salvage car that passes a structural inspection can be re-registered as rebuilt. Keeping it usually lowers your payout, so ask the insurer what it would deduct.

Source: MyChoice: Car write-offs, how it works (Ontario focused, updated September 24, 2026, read November 10, 2026). The line about lowering the payout is our reading, so ask your insurer.

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