What is a Depreciation Waiver for My Auto Insurance?

Couple sitting in their car

Bow Valley Insurance of Calgary works to keep Alberta drivers covered with the very best insurance choices available. We partner with Canada’s most reputable insurance providers to provide exceptional auto insurance products and work to keep our clients informed of changes in the industry and the options available to them.

It has been estimated that the average driver will file an auto accident claim with an insurance company approximately once every 17.9 years. The odds are that you will be involved in not one, but perhaps several, car accidents in your life, no matter how safe you are on the road.

Endorsement SEF 43r/l or the Limited Waiver of Depreciation

One endorsement available to Alberta drivers for their auto insurance coverage is the Standard Endorsement Form commonly referred as SEF 43, the “limited waiver of depreciation.” As vehicles lose their value quite quickly after driving off the lot, this option may be attractive to some.

In your typical automobile collision coverage, when it is deemed that cutting you a check for the current fair market value of a vehicle declared a “total loss” will be less expensive for the insurer than a repair effort, the negotiation centres upon the residual value of the vehicle. In plain English, standard automobile insurance is a form of “actual cash value” coverage and in no way analogous to “replacement value” insurance. You – the claimant – generally suffer the financial loss for the depreciation of the value of your car.

A limited waiver of depreciation flips that equation. On most policies that offer such an endorsement subject to underwriting criteria and meeting the eligibility qualification, you can generally qualify for this optional coverage if you are the first owner or lessee of a factory new or demonstration vehicle. Of course, such an endorsement comes at a cost, one that is as highly variable as the particulars of your driving history and the model of vehicle you’ve chosen.

Details of the Endorsement

If you are making monthly financing repayments on a vehicle that is two to two and one half years “young,” it may be in your best interest to acquire such an endorsement as a hedge against being “financially responsible” in the event of the loss of the vehicle in an accident. Paying a little bit more every month or quarter for a depreciation waiver is usually easier than saving cash against a possible value shortfall or paying off the lost vehicle while arranging financing for the replacement.

If you need to make savings on your premium to add a limited waiver of depreciation, you could choose to limit your glass coverage for a credit. The glass is still covered against collision damage. The 13d endorsement is about paying out of pocket for gravel chip repairs or vandalism losses to the glass.

What About High Value Vintage Cars?

Do note that the limited waiver of depreciation is applicable only to newer cars. Many vintage cars are often worth more today than they were ever worth when new. That added value requires a special type of insurance to protect the value of the car based upon factors other than its actual value and the odometer reading. Bow Valley Insurance of Calgary also represents major insurers that offer collector vehicle coverage.

Also, remember that whether the cars you drive are new or old, if you regularly rent cars, either here or in the United States, to extend your automobile coverage to a rental requires a SEF 27 endorsement. Don’t depend upon over the counter add on coverage you know you will never take the time to read over for limits and exclusions. Instead, extend the insurance you know and trust to the vehicle you will rent.

Contact Bow Valley Insurance of Calgary for the lowest automobile insurance quotes you can—for free.