When the insurance company should replace your car…

Vehicle scarcity affects all sectors of activity. Among the most problematic are insurance companies, which must quickly replace vehicles after a disaster. Sensitive situation often referred to consumer court.

In fact, it seems that many insurance companies have not adapted to this new reality, where, of course, the customer is penalized. As evidence, there are two cases I have been told.

long delays

First, let’s consider the case of Diane, the owner of the 2017 Chevrolet Sonic, who recently had a traffic accident. With the side airbags proliferating, and the right-hand side completely demolished, the insurance company chose to declare the car completely lost a few days later. By the time Diane finds another one, the insurance company provides her with a rental form. Ironically, Mitsubishi Mirage won’t go shopping for it because she doesn’t really like it!

Unfortunately, like anyone shopping for a car today, Diane finds that new cars are rare and that small cars aren’t on the streets either. So it’s hesitant between the Hyundai Kona and the Nissan Kicks, which are clearly not immediately available. In fact, he will have to wait two months before one of these two models arrives, which at the time of discussion had led to delivery until at least the end of July. The problem is that in this context, Diane will have to pay her own pocket rent for a month, until her new car arrives at the dealership. In fact, the insurance company cannot offer to rent a replacement car for more than 30 days, which means that the insured is penalized in this case.

When the insurance company should replace your car...

new value

Now here’s the case of Martin, who in 2019 got an all-new Volkswagen Golf. A manual hatchback, just the way he likes it, that was paid for about $23,500 before taxes. Unfortunately, his golf game was the target of thieves a few weeks ago, and has not been found since.

Having partnered with his insurance company for a replacement warranty (known as replacement cost), Martin thus expects to be able to get a vehicle equivalent to his, realizing that the Volkswagen Golf is no longer sold in Canada. Thus, we can think of Honda Civic hatchback, Mazda 3 Sport or Toyota Corolla hatchback.

However, the insurance company rejects these models, claiming that they are in a higher class than golf. In short, the insurance company only agrees to pay for a car of equivalent value, which, in context, simply no longer allows you to get a compact hatchback. That said, the Mazda3 in the GX version starts at $24,265: that’s pretty comparable to the price of a Golf purchased about 30 months ago.

When the insurance company should replace your car...

After countless exchanges, the insurance company only accepts the purchase of a Kia Rio, Hyundai Venue, Mazda CX-3 or Nissan Kicks/Sentra/Versa. In short, vehicles with a bill equal to or less than the amount paid at the time, thus not taking into account the fact that the price of vehicles has exploded in recent years. For example, a Honda Civic LX that sold for $21,000 in 2019 costs just over $27,000. An increase of more than 20% in four years that the insurance company does not accept to absorb.

Add to this situation the fact that again, the replacement rental car is only paid for by the insurance company for 30 days from the date of theft and you have a particularly unfortunate situation for the insured. In this context, the latter may appeal the case manager’s decision. Because obviously if golf stays in the market, it will also cost 20% more than it did in 2019.

However, the current context makes the task difficult for both policyholders and insurers. They encounter problems with the availability of new vehicles and spare parts for repair, which increases the cost of demanding an extension of the duration of the file. However, don’t worry, insurance companies have thought of everything and are now offering coverage to extend the car rental term to 60 days. You can also get a replacement warranty for the used model regardless of consumption. Obviously, in the context in which the insured agrees to pay more always…

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