Endorsement 43 option E and total loss: questions and answers
This FAQ answers frequently asked questions about the application of endorsement 43 option E in the event of total loss, and the new “Marked-up price paid” settlement method which replaces the “Non-replacement of specific vehicle option in paragraphe 3 under Option 43E.
Q1 – If a policyholder decides to replace their vehicle, can they ask to be compensated based on the marked-up price paid?
A1 – Yes. Policyholders can ask to be compensated based on the marked-up price paid regardless of whether they decide to replace the vehicle. They are free to choose any of the three types of compensation under Option 43E – Total loss – Replacement cost.
Q2 – When calculating the marked-up price paid, what dates should I use to determine the number of days between the vehicle purchase agreement date and the date of the total loss or constructive total loss?
A2 – Use the vehicle purchase agreement date and the date of the loss occurrence.
Q3 – What percentage should I use if the annual percent change in the Consumer Price Index (CPI) for vehicle purchases or leases is negative?
A3 – Disregard the negative percent change in the CPI and use a rate of 0% instead.
Q4 – At what point should I apply taxes when settling claims using the “Marked-up price paid” option?
A4 – Start by applying the CPI rate for the years in question to calculate the marked-up price paid. Once you have determined the amount, add the taxes to arrive at the final payment amount. The compounded CPI increase should always be applied before, not after you’ve added the taxes.
Q5 – If a policyholder took advantage of a discount or rebate offered by the dealer or manufacturer at the time of purchase, should that discount or rebate be deducted from the price paid for the vehicle?
A5 – Yes, any discount or rebate offered by the dealer or manufacturer at the time of sale should be deducted from the price paid for the vehicle.
Q6 – If the policyholder received government subsidies for the purchase of electric vehicles, should those subsidies be deducted from the price paid for the vehicle?
A6 – No, government subsidies shouldn’t be deducted from the price paid for the vehicle. And they shouldn’t be deducted from the final payment amount either since they are considered equivalent to a down payment made by the buyer.
In some cases, those subsidies do not appear on the vehicle purchase agreement because they were issued by cheque to the policyholder.
The change came into effect on January 15, 2025 and had been announced by the Autorité des marchés financiers.
