While U.S. auto tariffs on imported vehicles have dominated the headlines, it's actually the Canadian government's retaliatory tariffs—effectively levied on its own consumers—that may cause complications if your vehicle is damaged in a collision.
If your car is damaged in an accident in Ontario, you'll generally be able to make a claim under your auto insurance policy. But the interplay between tariffs, supply chains, and insurance policy terms can complicate how your claim is assessed and how much you ultimately receive.
Understanding Property Damage Coverage in Ontario
In Ontario, there are several categories of insurance coverage that apply to property damage following a vehicle accident.
Direct Compensation – Property Damage (DCPD)
This mandatory coverage applies when:
- The accident occurs in Ontario,
- Another vehicle is involved,
- That vehicle is insured by an Ontario-licensed insurer, and
- The other driver is at least partially at fault.
What DCPD covers:
- Damage to your vehicle,
- Damage to its contents,
- Loss of use (e.g., rental car or public transit).
DCPD will pay for repairs, minus your deductible. If your car is deemed a total loss (or "written off"), the insurer will pay its actual cash value at the time of the collision—not what it costs to replace it.
Rising Repair Costs and the Risk of Write-Offs
The Canadian government's 25% tariff on imported U.S. vehicles does not apply to auto parts. In theory, that means repair costs shouldn't rise dramatically. In practice, however, the widely reported supply chain disruptions caused by tariffs on both sides of the border are already driving up repair costs—and delaying repairs.
While these delays and increased costs don't immediately affect you if the insurer covers your repairs, they make it more likely that your insurer will write off your car rather than repair it.
What Does It Mean to Have Your Car Written Off?
A car is considered a "write-off" when the cost to repair it exceeds its actual cash value (ACV). Sometimes, insurers will also write off a car if key parts are unavailable due to supply chain issues or backorders.
If your vehicle is written off, your insurer is not required to pay what it costs to replace your vehicle—only what it was worth at the time of the accident, usually based on wholesale market data (e.g., "blue book" value).
The Reality of the Payout
Even in the best-case scenario, you'll likely suffer a financial loss if you want to replace your vehicle. For example, if you drive a 2022 Honda Civic with 43,000 km, your insurer may only pay the average wholesale value of a similar 2022 Civic in the same condition. They are not obligated to cover the cost of a new vehicle.
That's where legal help can make a difference. A lawyer can help you negotiate with your insurer to ensure you get a fair assessment. If you come prepared with a detailed record of your vehicle's condition, comparables, and receipts for upgrades or maintenance, you can often advocate for a higher cash settlement.
Why Tariffs Matter Even More for Write-Offs
Tariffs come into sharp focus when it's time to replace your written-off vehicle. If you own a car subject to Canada's 25% tariff on U.S.-assembled, non-CUSMA-compliant vehicles, you could face a major gap between the insurer's payout and the replacement cost.
Affected models include many electric vehicles manufactured in the U.S., such as:
- Tesla (Model 3, Model Y, Model S, Model X),
- Rivian,
- Lucid,
- Ford Mustang Mach-E,
- As well as many models from Ford, GM, and Stellantis (Chrysler, Dodge, Jeep, Alfa Romeo, Fiat).
If you're driving a tariffed vehicle like a Mustang Mach-E and it's written off, you may face a significant out-of-pocket expense to replace it—even with insurance.
Protecting Yourself: Consider the OPCF 43 Endorsement
If you're driving a vehicle affected by tariffs, it's worth speaking to your insurance broker about adding OPCF 43 – the Replacement Cost Endorsement, sometimes called a "waiver of depreciation."
Instead of being paid out the depreciated wholesale value of your chipped-and-dinged vehicle, this endorsement ensures you're covered for the lowest of:
- The actual purchase price of the vehicle and its equipment,
- The manufacturer's suggested list price at the time of original purchase,
- The cost to replace the vehicle with a new one of the same make, model, and equipment.
This endorsement can bridge the gap between the payout and the post-tariff replacement cost—and may be especially important in today's market.
Navigating Vehicle Claims in a Changing Market
Ontario has a tightly regulated system for dealing with both property damage and personal injury claims arising from vehicle accidents. Our team has a deep experience working with insurers and advocating for our clients on all aspects of motor vehicle accident claims.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
