Does the amount you paid for your car in a private sale affect the write off value?
November 8, 2005 10:17 AM   Subscribe

Does the amount you paid for your car in a private sale affect the write off value?

My girlfriend's car was stolen this past weekend. A 2 hour period during the day, off a nice Vancouver residential street. It was a red '93, the make and model the second most stolen car in the province, according to the insurance co. You see these cars everywhere. Especially after you've just had one taken away.

Here is what is freaking me out. I bought the car for her (well, I did all the legwork and chose it, etc, it was her money) a month ago, and the people I bought it from and I claimed a much lower purchase price than actually exchanged hands in order to cheat the taxes.

If we don't ever get the car back, is the adjuster going to look at that transfer form and suggest that since we "paid" so little for the car officially, that they should just re-imburse her for that amount?

According to the form, we paid abotut a third of what the car is worth on the open market. In reality - the car was in nice shape, the mileage low - we may have paid just above market vaue.
posted by miles1972 to Law & Government (6 answers total)
I was informed by my auto insurance company that comprehensive payouts, in the case of total vehicle loss/smashing, are based on some sort of "book value." This is in the US, though.

Why don't you just call up the company and ask?
posted by rxrfrx at 10:25 AM on November 8, 2005

Market value is the only appropriate pay-out, since I believe it's intended to replace the car and for that you would need to buy another. "Getting a good deal" or "finding a naive seller" shouldn't count against you in this case, since they're insuring the car on the market value to begin with.
posted by kcm at 10:28 AM on November 8, 2005

Just ask your adjustor what total loss payouts are based on. Or if you're in the U.S., check with your state's insurance regulatory office because the calculation method should be set by statute.
posted by nakedcodemonkey at 10:34 AM on November 8, 2005

I'm not familiar with Canadian insurance laws, but in the U.S., it's a good idea to find several advertisements for the same or very similar car with similar mileage. The reason is that some models are quite popular and often sell on the secondary market at values much higher than the NADA, Edmunds, or Kelly Blue Book values.

Have these ads handy, so that when they offer a settlement for replacement value, if it's lower than it should be, you can back up the argument. I've suffered a number of thefts and had to argue the replacement value this way. I've won every time.
posted by TeamBilly at 12:49 PM on November 8, 2005

ICBC will hold you to the sale price listed on the transfer form[1] for somewhere around six months to a year unless you can show significant other costs were incured, like it needed tires/battery/windshield or an engine or something. So if you just bought the car last week they are going to reimburse you the taxed value. If you bought it last year they'll look more to the book value. At only a month since the purchase you much closer to the "pay the declared sale price" side than the "pay book value" side.

Whatever you do, don't admit to ICBC you paid more than you declared on the transfer form. If you do they will not only be paying you the "sold at" value but they make you pay the tax difference if your lucky and charge you with tax fraud if your not.

I'd recommend you hire an independent adjuster and tell them everything if ICBC doesn't come at least close to offering the actual purchase price.

[1] after all they are a branch of the goverment, paying out the declared sale price is a kind of punitive action against tax cheats.
posted by Mitheral at 7:39 PM on November 8, 2005

For all you non-BCers: ICBC = Insurance Corporation Of British Columbia, an arms length crown corp. Everyone in BC has to register and buy basic insurance for automobiles thru icky-bicky.
posted by Mitheral at 7:48 PM on November 8, 2005

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