Can you keep your car after it’s been written off by your insurance company?

If you’ve ever been involved in an accident where your car was declared a total write-off by your insurance provider, you know how overwhelming the situation can feel.

Suddenly finding yourself without a vehicle is inconvenient enough, but the added financial burden of searching for an affordable replacement can make matters even worse. And if your car holds sentimental value – whether it was a gift from a beloved family member or simply a vehicle you really enjoy driving –the loss can feel even more personal.

What many drivers don’t realize, however, is that even if your vehicle is a total write-off you may be able to keep it thanks to an option known as an owner-retained salvage agreement.

In an owner-retained salvage agreement, the policyholder keeps their vehicle and accepts a settlement based on the current market value of the vehicle, minus the salvage value, explains Jesica Ryzynski, a claims specialist at Mitch Insurance. The other option would be a Total Loss Agreement, in which case the insurer retains the salvage and pays the policyholder the fair market value of their vehicle at the time of the loss.

So, if your vehicle is in an accident and is deemed to be a write-off by your insurance carrier, an owner-retained salvage agreement allows you to keep the car. The insurance company will first deduct the salvage value (which is the amount your insurer would have received for the car when sold as salvage) from the final payout you receive for your claim. For example, if the insurance company would have given you a payout of $10,000 for the vehicle but estimates it would have received $2,000 for selling the car as salvage, it will then offer you $8,000. You would then accept the reduced payment and retain full possession of the car.

This option can be particularly useful for a reliable car that your insurance company has determined is too expensive to fix. Getting possession of the vehicle and paying for repairs yourself (with proceeds from the payout) can be much more affordable than buying a new or used car.

When someone owns an older vehicle that has been well maintained and/or has low mileage, for example, they may have difficulty replacing it with a used car of the same quality, says Ryzynski.

One of the fears I hear from people when they find out that their vehicle is a total loss, is the worry they have to take on a car payment. They are so anxious because it isn’t something they can afford. If those people can retain their vehicle and use the settlement to pay someone to repair it, it could be a lifesaver for them financially.

Used car prices rose significantly during the pandemic, with Auto Trader reporting that the average cost of a used car in Canada rose by nearly $9,000 between 2021 and 2023. While prices have started to decline, potential tariffs could reverse this trend and push prices for both used and new cars higher again. In this context, choosing an owner-retained salvage agreement after a total loss might offer a more cost-effective solution compared to buying another used car.

If a car is deemed a write-off, there’s the possibility that it may be “branded.” This means that the damage is so severe that the insurance company or Ministry of Transportation will add a label to the car’s records to identify the level of damage it has sustained.

Each province has their own standards of designation, but they usually fall into one of three categories:

If your car is significantly damaged and labelled accordingly, it might not be a good idea to pursue an owner-retained salvage agreement as it may not be worth the time, expense and hassle of getting your vehicle repaired.

I always advise people to confirm that the vehicle won’t be branded, and I always follow up to double check with the adjuster myself, says Ryzynski. If a vehicle is branded, depending on the brand, the policyholder may have difficulty insuring it again after the repairs are done.

It could also make the vehicle uninsurable. Even if a company will insure the car, there could be additional requirements and costs, such as a structural safety. In these cases, I don’t recommend the policyholder try to retain the vehicle.

In today’s uncertain times, keeping an older vehicle after a total loss may be a practical and economic solution, however, Ryzynski emphasizes that it may not be the right choice for all drivers.

In this current economical climate, if the policyholder can retain their older vehicle and avoid a car payment or the stress of trying to find a reliable used vehicle, it’s an option that should always be discussed, she says.

It’s not going to be the best choice for everyone. Sometimes the parts needed to repair the vehicle are no longer available or it may be hard to find a mechanic equipped to do the work. It’s important that people confirm there will not be a brand on the vehicle, but also that the parts they need can be found and that someone can do the repairs.

Choosing to pursue an owner-retained salvage agreement requires careful consideration of your own unique financial situation, the condition of your car and the potential challenges involved in repairing it.

Want to learn more about owner-retained salvage agreements and discuss whether it might be an option for you? Give us a call at Mitch. Our team of insurance brokers is always here to help.