Groupement des assureurs automobiles (GAA) wishes to inform industry stakeholders of possible delays in processing auto insurance claims due to supply issues.
As Maurice Lefrançois, Assistant General Manager, states, “Because payments made by insurers are used to repair or replace damaged vehicles after a loss, the supply issues that are affecting other sectors are also affecting our industry.”
Supply issues are currently slowing down a good many automotive claims, whether they involve obtaining new parts or replacing a vehicle entirely.
According to GAA’s consultation, the problem exists with all vehicle makes and models, and especially with newer ones.
Insurers getting involved
In light of the inconveniences caused by the situation, insurers are working with their various partners to find safe solutions that meet the needs of their policyholders.
For example, when safe to do so, some insurers are agreeing to pay for temporary repairs so that policyholders can use their vehicles. In other cases, they authorize repairs with used parts while waiting for the new OEM parts provided for in the contract to arrive.
Mr. Lefrançois adds, “The priority for insurers is making sure that the situation doesn’t cause problems in safely getting vehicles back on the road. This means that each case will be treated according to the coverage in the contract, the type of damage and the availability of parts or vehicles.”
Automobile insurance coverage
When an accident happens, the standard policy provides that the settlement of a claim must take into account the vehicle’s wear and tear (depreciation). The payment therefore reflects the value of the vehicle on the day of the loss— unless the insured has purchased replacement cost coverage (The Q.E.F. No 43 A to F endorsement – Change to indemnity or the Q.P.F. No 5 policy – Replacement insurance)
Partial loss
If the insured has the Q.P.F. No 5 or the Q.E.F. No43A, the cost of the damage will be determined based on the cost of new OEM parts from the manufacturer, and no deduction for depreciation will be applied. Keep in mind that the vehicle must be repaired for such protection to apply.
Total loss
Option 43E – Payment based on vehicle replacement value
This endorsement is a complement to the standard policy (Q.P.F. No 1) and is intended to modify contract payment terms.
If the vehicle is a total loss, the following options apply:
- Replacement with a new vehicle having the same specifications, equipment and accessories. If such a vehicle is not available, it will be replaced by a new vehicle with similar specifications, equipment and accessories.
- Replacement with a new vehicle other than those described in point 1 or by a used vehicle: The amount paid by the insurer will be equivalent to i) the price of the new or used replacement vehicle or ii) the purchase price paid for the vehicle declared a total loss. The payment amount will be the greater of the two amounts.
- No replacement of the insured vehicle. If the vehicle isn’t replaced, the payment made by the insurer will be equal to the purchase price paid for the vehicle or its market price at the time of purchase. The payment amount will be the lesser of the two amounts.
Replacement insurance (Q.P.F. No 5)
This insurance is intended to replace a vehicle declared a total loss. It supplements the standard insurance policy (Q.P.F. No1). This means that once a loss occurs, payment is provided by the standard insurance policy (Q.P.F. No1) and the Replacement insurance policy (Q.P.F. No 5).
Under the Q.P.F. No 1 policy, insured receives a payment corresponding to the value of the vehicle on the day of the accident. The Replacement insurance policy (Q.P.F. No 5) provides for the payment to replace the vehicle declared a total loss with a new one having the same specifications and equipment. The payment represents the difference between the value of the replacement vehicle and the payment received under the Q.P.F. No 1.
If no replacement vehicle is available, an equivalent vehicle may be selected. The payment will represent the difference between the payment received under the Q.P.F. No1 and the value of the equivalent vehicle.
A policyholder may also choose a vehicle of a lesser or greater value.
In the case of a vehicle of lesser value, they payment will represent the difference between the payment received under Q.P.F. No 1 and the value of the replacement vehicle.
In the case of a vehicle of greater value, the policyholder will have to pay the difference between the price of the replacement vehicle and the cost of a new vehicle having the same specifications and equipment as the vehicle to be replaced.
Raising awareness and informing consumers
GAA will roll out a campaign to make consumers aware of the situation and remind them of those settlement options and terms provided for in the various types of insurance available in Quebec.
GAA has developed various content for policyholders:
- Car accident? Expect delays in settling your claim. For more information, click here.
- Replacement cost insurance: Learn about the provisions of your contract. For more information, click here.
