Several drivers are arguing that Canadian insurers should pay the depreciation costs of a car after a crash – a system that is in place in some US states.
When a car is involved in a crash, its value immediately takes a hit. This diminished value remains with a vehicle even if it was been properly repaired, which could hurt drivers looking to sell their cars.
Although this diminished value is something Canadian drivers normally cannot make an insurance claim for, it has not stopped several car owners from trying.
Bill Brown’s SUV was just five months old when another driver hit the vehicle. While the collision did not completely wreck the vehicle, it resulted in the SUV losing thousands of dollars in value. Brown later took the at-fault driver and her insurer to small claims court in Edmonton in an attempt to recoup the diminished value.
"I took the stand because I had a lot of damage to a vehicle that was five months old," Brown told CBC News.
"There was $15,000 damage done and I knew I'd have to disclose that when I sold it, and it would be worth less than if it had not been in an accident.”
Brown represented himself against two lawyers representing the at-fault driver’s insurer, and initially won his case. The judge awarded him $6,000 in damages, but the insurance company appealed, and Brown received only $1,500. He was also ordered to pay legal costs for the other driver.
"These battles are fought at the small claims level, they are not for large amounts. Most amounts are not large enough to warrant paying a lawyer, so most Canadians will end up representing themselves and I can tell you it's not an even battle," he said.
Another driver, Ray Signorello, filed a lawsuit against the Insurance Corporation of British Columbia (ICBC), demanding that the insurer pay $16,000 for the diminished value of his Mercedes-Benz convertible.
"If a car gets into an accident, that's part of the history of the car. So it only makes sense," Signorello explained, adding that he went to court to make a point.
Signorello’s car was damaged by an airport valet parking employee, which led to $26,000 in repairs.
"If I ask you, which car would you rather pay more for? A car that had no accident, or a car that had, in this case, a severe accident? I think most people's answer would be, 'I'd take the car that didn't have an accident.'"
Both drivers have referred to several states in the US – such as Georgia, Mississippi, North Carolina and New York – where auto insurers have been doling out diminished value payouts for years.
The Insurance Bureau of Canada (IBC) reminded that no province of territory in Canada offers that kind of coverage.
"Auto Insurance policies are designed to cover what are known as direct losses. The responsibility of the insurance company is to put the damaged vehicle in the same condition that it was in prior to the accident causing the damage,” IBC director of media and digital communications Steve Kee told CBC News in an email. "Any reduction in the value of that vehicle is regarded as an indirect loss and as such is not contemplated to be covered under the policy.”
