The scarcity of vehicles affects all sectors of activity. Among the most problematic, there is that of insurers, who must quickly replace vehicles following a disaster. A delicate situation that is too often relegated to the consumer’s court.
In fact, it is that several insurers seem not to have adapted to this new reality, the customer being of course penalized. As proof, here are two situations I was told regarding.
Long delays
Let’s first take the case of Diane, owner of a Chevrolet Sonic 2017, who was recently involved in a traffic accident. With the side air bags deployed, the right side completely demolished, the insurer elected to declare the car a total loss following a few days. By the time Diane can find another one, the insurer provides her with a rental model. Ironically, a Mitsubishi Mirage that she won’t go shopping, since she really doesn’t like it!
Unfortunately, like anyone shopping for a vehicle today, Diane finds that new cars are scarce and that small cars are not on the streets either. She therefore hesitates between Hyundai Kona and the Nissan Kicks, which are obviously not immediately available. In fact, he has to wait two months before the arrival of one of these two models, which, at the time of the discussion, brought delivery at least to the end of July. The problem is that in this context, Diane would have to pay a car rental out of her own pocket for a month, until her new car arrives at the dealership. Indeed, the insurer cannot offer a replacement vehicle rental for more than 30 days, meaning that the insured is penalized by this situation.
New value
Now here is the case of Martin, who in 2019 got himself a Volkswagen Golf brand new. A manual hatchback, just the way he likes them, which was paid for around $23,500 before taxes. Unfortunately, his Golf was the target of thieves a few weeks ago, and has not been found since.
Having subscribed with his insurer to the replacement warranty (commonly called replacement cost), Martin therefore expects to be able to obtain a car equivalent to his, aware that the Volkswagen Golf is no longer sold in Canada. Thus, one can think of a Honda Civic Hatchbackto one Mazda3 Sport or to a Toyota Corolla Hatchback.
However, the insurer refuses these models, claiming that they are in a category superior to that of the Golf. In short, the insurer only agrees to pay for a car of equivalent value, which, in the context, simply no longer allows you to obtain a compact hatchback. However, the Mazda3 in GX version has a starting price of $24,265: this sum is highly comparable with that of the Golf purchased regarding 30 months ago.
After countless exchanges, the insurer only accepts the purchase of a Kia Rioof a Hyundai Venueof a Mazda CX-3 or a Nissan Kicks/Sentra/Versa. In short, vehicles with an invoice equal to or less than the amount paid at the time, thus not contextualizing 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 now costs just over $27,000. An increase of more than 20% in four years, which the insurer does not accept to absorb.
Add to this situation the fact that once once more, the replacement rental vehicle is only paid for by the insurer for 30 days from the date of the theft and you have a particularly unfortunate situation for the insured. In this context, the latter may however contest the decision of the case manager. Because it is clear that if the Golf had remained on the market, it would also cost 20% more than in 2019.
That being said, the current context makes the task difficult for both policyholders and insurers. They face problems with the availability of new vehicles and parts for repairs, which increases the cost of a claim by extending the duration of a file. However, have no fear, insurers have thought of everything and now offer coverage to extend the duration of a vehicle rental to 60 days. You can also get a replacement warranty for a used model regardless of depreciation. Obviously, in the context where the insured agrees to always pay a little more…
