What Is a Total Loss Car and What Happens Next in Canada?

What Does “Total Loss” Mean?

A vehicle is declared a total loss when the cost to repair it exceeds its actual cash value (ACV), or when damage makes it legally or structurally unrepairable. Each province and insurer might use slightly different thresholds, but generally speaking:

If repair costs are 70% to 100% of the vehicle's value, insurers may declare it a total loss.

Example:
If your car is worth $10,000 and the cost to fix it is $8,000, the insurer may “write it off” and offer you a payout based on its pre-accident value instead of fixing it.

How Is the Value of a Totaled Car Calculated?

Your insurer will use market data and depreciation metrics to determine the Actual Cash Value (ACV) of your car just before the accident.

This typically includes:

• Make, model, year

• Kilometres driven

• Pre-existing damage

• Local market value of similar vehicles

⚠️ Important: You don’t have to accept the first offer. Many insurance companies offer below-market values in their initial payout, assuming most people won’t challenge them.

What Happens After a Total Loss Is Declared?

1. You’ll be offered a payout based on the ACV minus your deductible.

2. Your car becomes the property of the insurer, and they usually sell it for salvage.

3. In some provinces, you may be allowed to buy back your vehicle if you want to keep or rebuild it—but it will be branded as "salvage" or "rebuilt" in its registration.

Will a Total Loss Affect My Insurance Premiums?

In many cases, yes—especially if you were at fault. Even if you're not at fault, a total loss claim may still be considered a high-value payout and could impact your premiums.

To reduce your risk:

• Consider gap insurance if your car is leased or financed.

• Always review your policy coverage carefully.

• Understand your deductible and settlement rights.

Can You Keep a Totaled Car?

In Canada, you can keep a totaled vehicle, but you'll need to:

• Buy it back from the insurer (usually for its salvage value)

• Get it inspected and rebranded as “Rebuilt” or “Salvage”

• Pay for all repairs out of pocket

• Inform future insurers of its history (which may impact coverage)

Key Takeaways

✅ A total loss is declared when repairs exceed the car's value.
✅ You may have the right to keep or buy back the vehicle.
✅ Insurers don’t always offer a fair value up front.

💬 Final Word

If your car is written off in an accident, don’t panic—and don’t settle too quickly. Claimel can help you fight for a better settlement. With the right knowledge (and a little backup), you can get what you truly deserve.