If you have collision coverage and are responsible for the accident, your vehicle may be written off by ICBC if it costs too much to repair it. The same thing applies if you are not responsible for the accident, regardless of whether you have collision coverage.
When your vehicle is written off, in essence you are paid for the fair market value of your vehicle and ICBC gets to receive any money from selling your vehicle for salvage.
ICBC's decision on repairing versus writing-off your vehicle is an economic one. ICBC will assess the costs and take the cheaper approach.
In the event that your vehicle is written off, ICBC asks you to sign a Salvage Release form, which transfers your vehicle from your name into ICBC's name. This allows ICBC to sell the vehicle through a salvage auction. The salvage auction process supplies the majority of recycled parts used by the automobile repair industry in B.C. ICBC “pockets” any money they receive from the salvage auction.
ICBC will pay by cheque, the amount that they say is the value less any “collision deductible”, to the registered vehicle owner and any lienholder (i.e. anyone with a financial interest in the vehicle, such as a bank, lease company or repair shop).
ICBC also pays the applicable taxes in total loss settlements. If you are owed HST on your settlement, you will be given a HST voucher. You can use this voucher to reduce the HST payable on a replacement vehicle when purchased or leased through a licensed motor dealer.
In terms of the fair market value of your vehicle, ICBC generally uses a computer program called Autosource. Many people would say that this computer program underestimates the actual value of the vehicle especially if you check out print media or web sites and determine what vehicles are actually going for in your area.
The best way of counteracting ICBC's valuation is to have your own evidence from print media or web sites to show the price at which similar vehicles are being sold. Also, if you can show that your vehicle is better than the average by way of such things as repair receipts, low kilometers, extra equipment purchases, etc. you will be better able to convince ICBC that your vehicle is worth more than they say.
If you bought ICBC's Replacement Cost and Limited Depreciation coverage on a new vehicle, the amount you receive for your write off is equivalent to the cost of a replacement vehicle vs. determining the actual fair market value of your vehicle when it was totaled.
In some situations, if you have a specialized vehicle, such as motorcycles or trailers, you actually declare the value of the vehicle when you pay insurance and that value has a large bearing on what ICBC pays if your vehicle is written off.